After paying record fines and settlements in the wake of Dieselgate and wanting to turn the page with announcements about its big electrification plan, Volkswagen and its former CEO Martin Winterkorn are now being sued by the U.S. Securities and Exchange Commission (SEC).
The allegation? Orchestrating a “massive fraud” on American investors.
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As you know, back in 2015 the German automaker was caught using illegal devices on more than 11 million vehicles to defeat emissions tests—not just in the U.S., but also in Europe and other markets. Winterkorn resigned amid the scandal and numerous investigations were undertaken to identify the actual culprits.
Last year, Winterkorn was charged by U.S. prosecutors and accused of conspiring to cover up the cheating.
Now, regulators and investors argue that they should have been informed sooner about the scope of the scandal, even though Volkswagen says it was not fully known at the time that they would face billions of dollars in fines and penalties, insisting that other companies had paid much lower sums for similar violations in the past.
“Volkswagen hid its decade-long emissions scheme while it was selling billions of dollars of its bonds to investors at inflated prices,” said Stephanie Avakian, co-director of the SEC's enforcement division.
The suit seeks to bar Winterkorn from serving as an officer or director of a public U.S. company and recover “ill-gotten gains” along with civil penalties and interest.
While neither Winterkorn nor his lawyer have made any comment, the manufacturer responded by saying the SEC complaint “is legally and factually flawed, and Volkswagen will contest it vigorously. 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.” It also claims once again that Winterkorn “played no part in the sales” of vehicles with illegal engines.
It is estimated that the global backlash against diesel has so far cost the Volkswagen Group over $43 billion.