US SEC sues Volkswagen and ex-CEO over diesel scandal

Cornelia Mascio
Marzo 15, 2019

The charges are tied to bonds that VW sold to investors in the 2014 and 2015, when the SEC alleges the company and its chief executive knew that more than half a million of the diesel cars and SUVs it sold in the US didn't comply with emissions regulations and so should have known they could face a massive recall.

The SEC said: "Volkswagen issued more than $13bn in bonds and asset-backed securities in the USA markets at a time when senior executives knew that more than 500,000 vehicles in the United States grossly exceeded legal vehicle emissions limits, exposing the company to massive financial and reputational harm". "By concealing the emissions scheme, Volkswagen reaped hundreds of millions of dollars in benefit by issuing the securities at more attractive rates for the company, according to the complaint".

After having already paid more than $30 billion in overall penalties as a result of the "dieselgate" scandal, the German automaker is now fighting these claims, saying that they are "legally and factually flawed", and that they will be contested vigorously, reports Autonews. No investors were harmed, VW said.

The SEC suit seeks to recover "ill-gotten gains" through civil penalties and fines, and also calls for Winterkorn to be barred from serving as a director of a U.S. company.

Allegations that VW wrongfully withheld information about the emission software used in its diesel cars have loomed over the company since the scandal first broke in 2015.

Martin Winterkorn, who resigned in 2015 as VW's chief executive when the scandal was revealed, is also named in the civil complaint, which was brought by the SEC late on Thursday.

It adding that VW "repeatedly lied to and misled USA investors, consumers, and regulators as part of an illegal scheme to sell its purportedly "clean diesel" cars and billions of dollars of corporate bonds and other securities in the United States". This cost VW billions of dollars in lawsuits and settlements, and the company was forced to recall millions of vehicles. 13 people have been charged in the United States, including Winterkorn and four Audi managers.

Volkswagen has agreed to pay more than $25 billion in the USA in connection with the three-and-a-half-year old scandal, paying claims from owners, environmental regulators, states and dealers, and has offered to buy back about 500,000 polluting U.S. vehicles.

The SEC is going after Volkswagen. Two VW executives have been convicted in the scandal and are now serving sentences in USA federal prisons.

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