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GM investors not shaken as car recall takes $3 billion off company’s market value

By Jeff Plungis
Bloomberg News

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General Motors Co. faces fines of $7,000 a day for not fully answering questions about why it delayed a recall of 2.59 million vehicles to fix a defective ignition switch, U.S. regulators said.

GM didn’t respond by an April 3 deadline to more than one-third of requests made by the National Highway Traffic Safety Administration, which is investigating whether the largest U.S. automaker broke laws in delaying the recall, the agency said.

Thirteen people have died in crashes tied to the defect.

GM has accrued $28,000 in fines, NHTSA Chief Counsel O. Kevin Vincent said in a letter to Lucy Clark Dougherty, general counsel of GM North America.

The company’s explanation that it’s waiting until an internal company investigation is complete to fully comply with the regulator’s request is “irrelevant,” Vincent said.

“If GM does not fully respond to the Special Order immediately and pay all civil penalties accrued as of the date on which it does so, NHTSA may refer this matter to the U.S. Department of Justice,” Vincent said.

GM spokesmen didn’t immediately respond to a request for comment.

Separately, GM announced it will pay a 30-cent quarterly dividend to common stockholders in June. It will be the largest U.S. automaker’s second such payout following a suspension in 2008 that preceded its bankruptcy.

The automaker, which emerged from a U.S. government-backed bankruptcy in 2009, in January declared its first dividend since its reorganization.

The first payout announcement coincided with the appointment of Chief Executive Officer Mary Barra, the first woman to lead a global automaker, and investor optimism as the U.S. Treasury sold its stake in the company.

GM’s latest dividend is payable June 26 to stockholders of record as of June 10.

Shares in the company rose 1.2 percent to $34.53 at the close in New York and have lost 16 percent this year.


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