Oct. 27 (Bloomberg) -- General Motors Corp., already hobbled this year by $3.8 billion in losses and a non-investment credit rating, is being investigated over its pension accounting and transactions with bankrupt auto-parts maker Delphi Corp.

GM is cooperating with the U.S. Securities and Exchange Commission after receiving subpoenas, company spokesman Jerry Dubrowski said yesterday. The Detroit-based automaker's finance unit, General Motors Acceptance Corp., is also being probed as part of an SEC and grand jury investigation of insurers, the company said.

The agency is studying whether companies inflate profit or minimize earnings swings by using unreasonable assumptions to value pension assets and liabilities. In the last two years, the SEC has asked Boeing Co., Northwest Airlines Inc., Navistar International Corp. and others for similar information.

GM's obligations of as much as $12 billion in additional retirement costs for workers from Delphi, a former GM unit, are also an issue, said Argus Research Corp. analyst Kevin Tynan. As part of the 1999 spinoff of Delphi, GM agreed to cover some retirement costs for Delphi workers if parts maker couldn't pay them.

Delphi declared bankruptcy Oct. 8 after it failed to win a rescue plan from GM and its unions. It was the largest automotive-related bankruptcy in U.S. history.

GM's bonds fell in Europe. The extra yield, or spread, investors demand to buy the parent company's euro-denominated 7.25 percent bond due in 2013 rose 48 basis points to 800 basis points, according to Fortis Bank. A basis point is 0.01 percentage point.

Shares of GM fell to $28.42 in Germany, from $29.17 at yesterday's close at the close of New York Stock Exchange composite trading yesterday. They've declined 27 percent this year.

The SEC probes of GM include: financial reporting of pension and other retiree benefit programs; transactions between the automaker and Delphi; recovery of recall costs from suppliers and supplier price reductions and credits; and GM's possible obligation to fund Delphi's pensions.

The subpoenas are another distraction for Chief Executive Rick Wagoner, who is trying to revive the 97-year-old automaker after four straight quarters of losses. The company's U.S. market share is at its lowest since the 1920s, with rivals including Toyota Motor Corp. and Honda Motor Co. gaining a larger share of the U.S. market with more fuel-efficient cars and a record of reliability.

GM's deteriorating finances have forced the automaker to seek a buyer for a majority of GMAC, which is projected to have a profit of more than $2.5 billion this year and pay a $2 billion dividend to GM to help prop up the auto operations.

Wagoner said last week that the automaker has a ``short list'' of potentially interested buyers for the stake, which Wagoner said he must sell to regain an investment-grade credit rating for auto loans. GM has earned more money selling loans and insurance than making cars and trucks since 2002. So far this year, GM has lost $6.3 billion making cars and earned $2.2 billion from GMAC.

The SEC has told companies in past requests to be as specific as possible in disclosing the assumptions they use to calculate pension costs and asset returns. In a letter to Caterpillar Inc. in June 2003, SEC staff encouraged the company to include past years' returns in calculating its future retirement costs.

This is cache, read story here