In re BorgWarner Inc.

 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 89677 / August 26, 2020 
 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 4164 / August 26, 2020 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-19932 
 
 
In the Matter of 
 
BorgWarner Inc.  
 
Respondent. 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS, PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER  
   
 
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”) against BorgWarner Inc. (“BorgWarner,” “Respondent,” 
or “the Company”).   
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) that the Commission has determined to accept.  Solely for the purpose 
of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
which the Commission is a party, and without admitting or denying the findings herein, except as 
to the Commission’s jurisdiction over it and the subject matter of these proceedings, which are 
admitted, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings 
Pursuant to Section 21C of the Securities Exchange Act, Making Findings, and Imposing a Cease-
and-Desist Order (“Order”), as set forth below.   

 
 
                                                                                   
2 
 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that:  
 
Summary 
 
1. From 2012 until the fourth quarter of 2016, BorgWarner failed to estimate its 
“incurred but not reported” or “IBNR” liability for future asbestos claims.  As a result, 
BorgWarner’s financial statements were materially misstated.  Although the Company recorded 
liabilities for filed asbestos-related claims and noted that future claims were probable, prior to 
2016, BorgWarner concluded that it could not reasonably estimate its IBNR liability for future 
asbestos claims.  BorgWarner came to this conclusion without conducting sufficient analysis, 
including any substantive quantitative inquiry, despite possessing nearly 40 years of historical raw 
claims data.  Rather, the Company’s assessment was based on untested qualitative assumptions not 
relevant to calculating an estimate.  As reported in its 2017 Form 10-K/A, filed in 2018, 
BorgWarner could have estimated its IBNR asbestos liability as early as 2012. 
2. In the fourth quarter of 2016, BorgWarner recorded a pre-tax $703.6 million charge 
for the IBNR liability and identified the charge as being the result of a change in estimate.  
Thereafter, the Company concluded that the charge was the result of an error and filed a 
restatement in 2018 to reflect its IBNR liabilities in appropriate prior periods dating back to 2012.  
The restated numbers were material to the Company’s financial statements and impacted, among 
other items, the amounts accrued for asbestos-related liabilities and pre-tax earnings.  BorgWarner 
reported that its failure to record the IBNR estimate was due to a material weakness in the 
Company’s internal controls over financial reporting.      
3. As a result of the conduct described in this Order, BorgWarner violated Sections 
13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 13a-1, 13a-11, and 13a-13 
thereunder. 
 
Respondent 
 
4. BorgWarner Inc. is a Delaware corporation incorporated in 1987 that provides 
technology solutions for combustion, hybrid and electric vehicles.  The Company manufactures and 
sells its products globally.  The Company’s stock currently trades on the New York Stock Exchange 
under the ticker symbol “BWA.” 
 
Facts 
5. BorgWarner and its subsidiaries have been frequently named as defendants in 
personal injury lawsuits alleging exposure to asbestos-containing automotive parts – mainly clutch 
assemblies for use with manual transmissions – that the Company manufactured from 1928 
                                                
1
 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other 
person or entity in this or any other proceeding. 
 

 
 
                                                                                   
3 
through approximately 1986.  In 2004, the Company’s primary insurance policies were exhausted, 
and BorgWarner became responsible for managing its asbestos-related claims rather than relying 
on its insurance companies as it had done in the past.  As part of that process, the Company built a 
database using the insurers’ claims data to record and manage its claims. 
 
6. Applicable accounting standards require companies to book a loss contingency 
charge whenever the estimated loss from a loss contingency is both probable and reasonably 
estimable.  From 2004 through 2015, BorgWarner consistently disclosed that losses from future 
asbestos claims were probable, but asserted that the amount of those losses was not reasonably 
estimable.  On that basis, BorgWarner did not book any IBNR charge during those years. 
 
7. From at least 2011 until 2014, BorgWarner’s conclusion that it could not 
reasonably estimate IBNR claims was memorialized in a two page memo-to-file (the “Memos”) 
authored and updated by a Company employee.   
 
8. The Memos consistently stated that BorgWarner could not reasonably estimate the 
amount of its IBNR asbestos liability due to a number of qualitative factors that created 
insurmountable uncertainty.  Specifically, the Company concluded that there was no way to 
accurately estimate how many people had been exposed to BorgWarner products, the incidence of 
illness, or the life expectancies of exposed individuals.  BorgWarner also concluded that because 
its asbestos-containing clutch pads were normally sealed inside a clutch housing, BorgWarner’s 
position was unique among asbestos defendants, rendering industry benchmarks inapplicable for 
estimating BorgWarner’s IBNR asbestos liability.  These conclusions were based on high-level 
assumptions that were not subject to substantive quantitative analysis, actuarial assessment, or 
other testing. 
 
9. In late 2014 and 2015, BorgWarner implemented a number of changes regarding its 
approach to asbestos litigation in an effort to reduce litigation costs.  As part of that process, the 
Company hired a new employee who had asbestos litigation experience, as well as prior experience 
with evaluating IBNR asbestos liability.  In the years leading up to 2014, no one at the Company 
reviewed the Memos memorializing the Company’s analysis, which were updated on an annual 
basis.  The process of creating and updating the Memos represented the Company’s only internal 
control around whether it could estimate its asbestos-related IBNR. 
 
10. Beginning in 2015, the Company discussed whether to retain an actuary to evaluate 
BorgWarner’s data for IBNR purposes.  Repeating the untested assumptions set forth in the 
Memos, BorgWarner determined that an actuary was not necessary, citing, among other factors, 
gaps in its claims data, the uniqueness of the Company’s product (which the company asserted 
rendered industry benchmarks inapplicable), and volatility in claims patterns.   
 
11. Thereafter, BorgWarner began to populate missing data fields, evaluate claims 
patterns, and assess volatility using information from the Company’s database, which included 
over 100,000 claims at the time and dated back to the 1980s; and also began evaluating other 
companies’ public filings.  
 

 
 
                                                                                   
4 
12. In conjunction with this work, in September 2016, the Company hired an actuarial 
firm with asbestos claims expertise (the “Actuary”) to perform an actuarial analysis for the purpose 
of determining whether the Company’s IBNR asbestos liability was reasonably estimable.   
 
13. While BorgWarner had previously concluded that its data set was incomplete, the 
Actuary was generally able to obtain sufficient information from litigation files accessible to the 
Company.  In addition, the Actuary determined that industry benchmarks could be applied to 
BorgWarner and that it did not need to adjust the benchmarks because BorgWarner’s claims data 
was volatile or inherently unique – a finding in contrast to the Company’s prior position that 
industry benchmarks were inapplicable.  Moreover, the Actuary found that the multiple inhibiting 
factors listed in the Company’s Memos (such as product uniqueness and unknown exposure rates) 
were not barriers to its estimation of future liabilities.  
 
14. In its 2016 Form 10-K, BorgWarner reported a change in estimate for the 
accounting of its asbestos-related IBNR liabilities and recorded a corresponding pre-tax, non-cash 
charge of $703.6 million.
2
   
 
15. Subsequently, on June 15, 2018, BorgWarner announced it would restate its 
consolidated financial statements due to a material weakness in its internal controls over financial 
reporting related to the Company’s historical assertion that IBNR asbestos liabilities could not be 
estimated.  BorgWarner stated that it had determined that it could have estimated an IBNR prior to 
Q4 2016, and that it would therefore need to reflect the one-time $703.6 million charge in 
appropriate prior periods.     
 
16.  BorgWarner’s material weakness in its internal controls over financial reporting 
around asbestos-related IBNR stemmed from its use of untested assumptions that, among other 
things, lacked substantive quantitative analysis and did not consider industry benchmarks to 
conclude that it could not reasonably estimate its IBNR liability.  BorgWarner filed an amended 
2017 Form 10-K on September 28, 2018 reflecting corrected financial statements dating back to 
year-end 2012.   
 
17. The impact of the Company’s misstatement was material to several financial 
statement items, including a 6% reduction in pre-tax earnings in both 2014 and 2015 and a more 
than 200% increase in asbestos-related liabilities for each year.   
 
Violations 
 
18. As a result of the conduct described above, BorgWarner violated the reporting 
provisions of Sections 13(a) of the Exchange Act and Rules 13a-1, 13a-11, and 13a-13 thereunder.  
Section 13(a) of the Exchange Act and Rules 13a-1, 13a-11, and 13a-13 thereunder require issuers 
like BorgWarner to file annual, current, and quarterly reports with the Commission containing such 
                                                
2
 In 2015, BorgWarner reported pre-tax earnings of $926.8 million.  In 2016, the Company reported pre-tax earnings 
of $190.5 million. 
 

 
 
                                                                                   
5 
information as the Commission’s rules prescribe.  As described above, BorgWarner’s financial 
statements contained in annual, current, and quarterly reports were materially mistatted. 
 
19. BorgWarner also violated Sections 13(b)(2)(A) and (B) of the Exchange Act.  
Section 13(b)(2)(A) requires an issuer like BorgWarner to make and keep books, records, and 
accounts, which, in reasonable detail, accurately and fairly reflect the company’s transactions and 
dispositions of assets.  Section 13(b)(2)(B) requires issuers like BorgWarner to devise and maintain 
a system of sufficient internal accounting controls.  As detailed above, BorgWarner failed to make 
and keep books, records, and accounts which accurately and fairly reflected transactions related to 
its IBNR for asbestos liabilities.  BorgWarner also failed to establish sufficient internal accounting 
controls relating to its IBNR for asbestos liabilities.   
 
V. 
 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent’s Offer. 
 
 Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that: 
 
 A. Respondent cease and desist from committing or causing any violations and any 
future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 
13a-1, 13a-11 and 13a-13, thereunder. 
 
B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 
penalty in the amount of $950,000 to the Securities and Exchange Commission for transfer to the 
general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If timely 
payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.   
 
Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169  
 

 
 
                                                                                   
6 
Payments by check or money order must be accompanied by a cover letter identifying 
BorgWarner as a Respondent in these proceedings, and the file number of these proceedings; a 
copy of the cover letter and check or money order must be sent to Carolyn Welshhans, Division of 
Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 20549-
5010A.  
 
 D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
private damages action brought against Respondent by or on behalf of one or more investors based 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 
 By the Commission. 
 
 
Vanessa A. Countryman 
Secretary 
 
 
 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 89677 / August 26, 2020 

 

ACCOUNTING AND AUDITING ENFORCEMENT 

Release No. 4164 / August 26, 2020 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-19932 

 

 

In the Matter of 

 

BorgWarner Inc.  

 

Respondent. 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS, PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING A CEASE-

AND-DESIST ORDER  

   

 

 

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 

Exchange Act of 1934 (“Exchange Act”) against BorgWarner Inc. (“BorgWarner,” “Respondent,” 

or “the Company”).   

 

II. 
 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) that the Commission has determined to accept.  Solely for the purpose 

of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 

which the Commission is a party, and without admitting or denying the findings herein, except as 

to the Commission’s jurisdiction over it and the subject matter of these proceedings, which are 

admitted, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings 

Pursuant to Section 21C of the Securities Exchange Act, Making Findings, and Imposing a Cease-

and-Desist Order (“Order”), as set forth below.   



 

 

                                                                                   

2 

 

III. 
 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  

 

Summary 
 

1. From 2012 until the fourth quarter of 2016, BorgWarner failed to estimate its 

“incurred but not reported” or “IBNR” liability for future asbestos claims.  As a result, 

BorgWarner’s financial statements were materially misstated.  Although the Company recorded 

liabilities for filed asbestos-related claims and noted that future claims were probable, prior to 

2016, BorgWarner concluded that it could not reasonably estimate its IBNR liability for future 

asbestos claims.  BorgWarner came to this conclusion without conducting sufficient analysis, 

including any substantive quantitative inquiry, despite possessing nearly 40 years of historical raw 

claims data.  Rather, the Company’s assessment was based on untested qualitative assumptions not 

relevant to calculating an estimate.  As reported in its 2017 Form 10-K/A, filed in 2018, 

BorgWarner could have estimated its IBNR asbestos liability as early as 2012. 

2. In the fourth quarter of 2016, BorgWarner recorded a pre-tax $703.6 million charge 

for the IBNR liability and identified the charge as being the result of a change in estimate.  

Thereafter, the Company concluded that the charge was the result of an error and filed a 

restatement in 2018 to reflect its IBNR liabilities in appropriate prior periods dating back to 2012.  

The restated numbers were material to the Company’s financial statements and impacted, among 

other items, the amounts accrued for asbestos-related liabilities and pre-tax earnings.  BorgWarner 

reported that its failure to record the IBNR estimate was due to a material weakness in the 

Company’s internal controls over financial reporting.      

3. As a result of the conduct described in this Order, BorgWarner violated Sections 

13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 13a-1, 13a-11, and 13a-13 

thereunder. 

 

Respondent 

 

4. BorgWarner Inc. is a Delaware corporation incorporated in 1987 that provides 

technology solutions for combustion, hybrid and electric vehicles.  The Company manufactures and 

sells its products globally.  The Company’s stock currently trades on the New York Stock Exchange 

under the ticker symbol “BWA.” 

 

Facts 

5. BorgWarner and its subsidiaries have been frequently named as defendants in 

personal injury lawsuits alleging exposure to asbestos-containing automotive parts – mainly clutch 

assemblies for use with manual transmissions – that the Company manufactured from 1928 

                                                
1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other 

person or entity in this or any other proceeding. 

 



 

 

                                                                                   

3 

through approximately 1986.  In 2004, the Company’s primary insurance policies were exhausted, 

and BorgWarner became responsible for managing its asbestos-related claims rather than relying 

on its insurance companies as it had done in the past.  As part of that process, the Company built a 

database using the insurers’ claims data to record and manage its claims. 

 

6. Applicable accounting standards require companies to book a loss contingency 

charge whenever the estimated loss from a loss contingency is both probable and reasonably 

estimable.  From 2004 through 2015, BorgWarner consistently disclosed that losses from future 

asbestos claims were probable, but asserted that the amount of those losses was not reasonably 

estimable.  On that basis, BorgWarner did not book any IBNR charge during those years. 

 

7. From at least 2011 until 2014, BorgWarner’s conclusion that it could not 

reasonably estimate IBNR claims was memorialized in a two page memo-to-file (the “Memos”) 

authored and updated by a Company employee.   

 

8. The Memos consistently stated that BorgWarner could not reasonably estimate the 

amount of its IBNR asbestos liability due to a number of qualitative factors that created 

insurmountable uncertainty.  Specifically, the Company concluded that there was no way to 

accurately estimate how many people had been exposed to BorgWarner products, the incidence of 

illness, or the life expectancies of exposed individuals.  BorgWarner also concluded that because 

its asbestos-containing clutch pads were normally sealed inside a clutch housing, BorgWarner’s 

position was unique among asbestos defendants, rendering industry benchmarks inapplicable for 

estimating BorgWarner’s IBNR asbestos liability.  These conclusions were based on high-level 

assumptions that were not subject to substantive quantitative analysis, actuarial assessment, or 

other testing. 

 

9. In late 2014 and 2015, BorgWarner implemented a number of changes regarding its 

approach to asbestos litigation in an effort to reduce litigation costs.  As part of that process, the 

Company hired a new employee who had asbestos litigation experience, as well as prior experience 

with evaluating IBNR asbestos liability.  In the years leading up to 2014, no one at the Company 

reviewed the Memos memorializing the Company’s analysis, which were updated on an annual 

basis.  The process of creating and updating the Memos represented the Company’s only internal 

control around whether it could estimate its asbestos-related IBNR. 

 

10. Beginning in 2015, the Company discussed whether to retain an actuary to evaluate 

BorgWarner’s data for IBNR purposes.  Repeating the untested assumptions set forth in the 

Memos, BorgWarner determined that an actuary was not necessary, citing, among other factors, 

gaps in its claims data, the uniqueness of the Company’s product (which the company asserted 

rendered industry benchmarks inapplicable), and volatility in claims patterns.   

 

11. Thereafter, BorgWarner began to populate missing data fields, evaluate claims 

patterns, and assess volatility using information from the Company’s database, which included 

over 100,000 claims at the time and dated back to the 1980s; and also began evaluating other 

companies’ public filings.  

 



 

 

                                                                                   

4 

12. In conjunction with this work, in September 2016, the Company hired an actuarial 

firm with asbestos claims expertise (the “Actuary”) to perform an actuarial analysis for the purpose 

of determining whether the Company’s IBNR asbestos liability was reasonably estimable.   

 

13. While BorgWarner had previously concluded that its data set was incomplete, the 

Actuary was generally able to obtain sufficient information from litigation files accessible to the 

Company.  In addition, the Actuary determined that industry benchmarks could be applied to 

BorgWarner and that it did not need to adjust the benchmarks because BorgWarner’s claims data 

was volatile or inherently unique – a finding in contrast to the Company’s prior position that 

industry benchmarks were inapplicable.  Moreover, the Actuary found that the multiple inhibiting 

factors listed in the Company’s Memos (such as product uniqueness and unknown exposure rates) 

were not barriers to its estimation of future liabilities.  

 

14. In its 2016 Form 10-K, BorgWarner reported a change in estimate for the 

accounting of its asbestos-related IBNR liabilities and recorded a corresponding pre-tax, non-cash 

charge of $703.6 million.2   

 

15. Subsequently, on June 15, 2018, BorgWarner announced it would restate its 

consolidated financial statements due to a material weakness in its internal controls over financial 

reporting related to the Company’s historical assertion that IBNR asbestos liabilities could not be 

estimated.  BorgWarner stated that it had determined that it could have estimated an IBNR prior to 

Q4 2016, and that it would therefore need to reflect the one-time $703.6 million charge in 

appropriate prior periods.     

 

16.  BorgWarner’s material weakness in its internal controls over financial reporting 

around asbestos-related IBNR stemmed from its use of untested assumptions that, among other 

things, lacked substantive quantitative analysis and did not consider industry benchmarks to 

conclude that it could not reasonably estimate its IBNR liability.  BorgWarner filed an amended 

2017 Form 10-K on September 28, 2018 reflecting corrected financial statements dating back to 

year-end 2012.   

 

17. The impact of the Company’s misstatement was material to several financial 

statement items, including a 6% reduction in pre-tax earnings in both 2014 and 2015 and a more 

than 200% increase in asbestos-related liabilities for each year.   

 

Violations 

 

18. As a result of the conduct described above, BorgWarner violated the reporting 

provisions of Sections 13(a) of the Exchange Act and Rules 13a-1, 13a-11, and 13a-13 thereunder.  

Section 13(a) of the Exchange Act and Rules 13a-1, 13a-11, and 13a-13 thereunder require issuers 

like BorgWarner to file annual, current, and quarterly reports with the Commission containing such 

                                                
2 In 2015, BorgWarner reported pre-tax earnings of $926.8 million.  In 2016, the Company reported pre-tax earnings 

of $190.5 million. 

 



 

 

                                                                                   

5 

information as the Commission’s rules prescribe.  As described above, BorgWarner’s financial 

statements contained in annual, current, and quarterly reports were materially mistatted. 

 

19. BorgWarner also violated Sections 13(b)(2)(A) and (B) of the Exchange Act.  

Section 13(b)(2)(A) requires an issuer like BorgWarner to make and keep books, records, and 

accounts, which, in reasonable detail, accurately and fairly reflect the company’s transactions and 

dispositions of assets.  Section 13(b)(2)(B) requires issuers like BorgWarner to devise and maintain 

a system of sufficient internal accounting controls.  As detailed above, BorgWarner failed to make 

and keep books, records, and accounts which accurately and fairly reflected transactions related to 

its IBNR for asbestos liabilities.  BorgWarner also failed to establish sufficient internal accounting 

controls relating to its IBNR for asbestos liabilities.   

 

V. 

 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent’s Offer. 

 

 Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that: 

 

 A. Respondent cease and desist from committing or causing any violations and any 

future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 

13a-1, 13a-11 and 13a-13, thereunder. 

 

B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 

penalty in the amount of $950,000 to the Securities and Exchange Commission for transfer to the 

general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If timely 

payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.   

 

Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169  

 

http://www.sec.gov/about/offices/ofm.htm


 

 

                                                                                   

6 

Payments by check or money order must be accompanied by a cover letter identifying 

BorgWarner as a Respondent in these proceedings, and the file number of these proceedings; a 

copy of the cover letter and check or money order must be sent to Carolyn Welshhans, Division of 

Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 20549-

5010A.  

 

 D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

 

 By the Commission. 

 

 

Vanessa A. Countryman 

Secretary