Published: Fri, March 15, 2019
Economy | By

United States sues Volkswagen for 'massive fraud' over emissions scandal

United States sues Volkswagen for 'massive fraud' over emissions scandal

The carmaker had "repeatedly lied to and misled United States investors, consumers, and regulators" the SEC said, adding that Volkswagen had issued more than $13b (£10b) in bonds and asset-backed securities in U.S. markets whilst senior executives knew that over 500,000 of its USA stocks "grossly exceeded legal vehicle emissions limits, exposing the company to massive financial and reputational harm".

Criminal charges in the USA are still outstanding against Winterkorn and several other German VW executives, over the emissions cheating scandal. The crisis involved as many as 11 million diesel cars worldwide and has cost the Wolfsburg-based company about 28 billion euros (US$32 billion) so far.

"The SEC does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with United States emissions rules when these securities were sold, but simply repeats unproven claims about Volkswagen AG's former CEO, who played no part in the sales".

The statement continued: "The SEC has brought an unprecedented complaint over securities sold only to sophisticated investors who were not harmed and received all payments of interest and principal in full and on time".

A court in the German city of Braunschweig is now assessing a group action covering suits brought by thousands of investors with claims totaling more than 9 billion euros.

In a prepared statement, Volkswagen responded to the new charges by calling them "legally and factually" flawed, and said the SEC was "piling on".

The automaker agreed to pay more than $25 billion in claims from owners, environmental regulators, states and dealers, and it offered to buy back the polluting vehicles.

That figure included $4.3 billion in USA criminal and civil fines.

But the SEC said VW "has never repaid the hundreds of millions of dollars in benefit it fraudulently obtained".

The SEC is going after Volkswagen.

The decision is the latest blow to the German carmaker from the "dieselgate" scandal, in which it admitted to installing software on its vehicles to trick emissions tests. It has also pleaded guilty to criminal charges in the United States and several managers, including Winterkorn, were charged there.

VW also faces investor lawsuits in Braunschweig, Germany.

The complaint centers around VW continuing to sell bonds and securities without informing investors about problems with diesel cars. Two VW executives have been convicted in the scandal and are now serving sentences in USA federal prisons.

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