The SEC stated that Borgwarner is a motor vehicle parts manufacturer in Michigan materially misstated financial statements by failing to account for asbestos liabilities from 2012 to 2016 in over $700 million in liabilities for future asbestos claims. In addition, it was stated that Borgwarner did not conduct any substantive quantitative analysis to estimate asbestos claims despite they had 40 years of historical raw claims data.

Borgwarner said they relied on untested assumptions that it could not estimate its liabilities for these claims, reported a charge for claims in 2017, restated its financial statements to report the chargers aggregating $700 million related to asbestos claims, and disclosed its internal controls over financial reporting were ineffective.

Asbestos defendants said asbestos caused by dust particles that are inhaled or swallowed, causing serious diseases like lung cancer and said in the US, 80% of companies are exposed to asbestos liabilities.

In conclusion, companies cannot claim an inability to reasonably estimate liabilities when the data they need to do so is available, said the division of enforcement.

Borgwarner violated its reporting and did not admit or deny any wrongdoing so they paid $950,000 penalty and to cease and desist from future violations of provisions.

Please refer to https://www.sec.gov/news/press-release/2020-195