The Securities and Exchange Commission alleged in a court filing that Volkswagen “perpetrated a massive fraud” and repeatedly lied to U.S. investors in connection with the so-called dieselgate scandal.
The regulator is suing Volkswagen and its former chief executive Martin Winterkorn over the German automaker’s diesel emissions scandal. The suit seeks to bar Winterkorn from serving as an officer or director of a public U.S. company and recover “ill-gotten gains.” Winterkorn was charged by U.S. prosecutors in 2018 and accused of conspiring to cover up the German automaker’s diesel emissions cheating.
The SEC said in its complaint filed in San Francisco that from April 2014 to May 2015, Volkswagen issued more than $13 billion in bonds and asset-backed securities in U.S. markets at a time when senior executives knew that more than 500,000 U.S. diesel vehicles grossly exceeded legal vehicle emissions limits.
“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,” the SEC said in a summary of its filing.
Volkswagen said the SEC complaint “is legally and factually flawed.” Reuters reported that a lawyer for Winterkorn could not immediately be reached early on Friday.
VW had said in its annual report that the SEC could take enforcement action against the company over the German automaker’s involvement in the emissions scandal.
The automaker said the agency is “piling on” and that the agency’s complaint is without merit.
The SEC has asked Volkswagen for information on potential securities law violations over certain investments the company may have sold to investors. The agency is looking for evidence determining whether the automaker failed to disclose information about vehicles that didn’t comply with U.S. emission standards when it issued certain securities to investors.
The SEC can issue fines and other civil penalties for violations of securities law.
One of the world’s largest carmakers, Volkswagen was rocked by reports first surfacing in 2015 that it had been caught cheating on emissions tests in the United States. The subsequent scandal cost Volkswagen billions of dollars to settle and forced the automakers to recall millions of vehicles.
Here is Volkswagen’s full statement to CNBC:
The SEC’s 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. The SEC does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with U.S. 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. Regrettably, more than two years after Volkswagen entered into landmark, multibillion-dollar settlements in the United States with the Department of Justice, almost every state and nearly 600,000 consumers, the SEC is now piling on to try to extract more from the company.
—Reuters contributed to this report.
