The US Securities and Exchange Commission has charged Volkswagen and its former CEO Martin Winterkorn with defrauding US bondholders in ongoing fallout from the company’s diesel-gate scandal, according to a report by CNBC.
Diesel-Gate Scandal Continues To Haunt Volkswagen
The charges by the Securities and Exchange Commission (SEC) against Volkswagen (VW) represent the ongoing financial fallout from the so-called diesel-gate scandal, first revealed in 2015, where VW was charged with using a hidden software feature that would help the company sidestep US emissions regulations on their diesel engines.
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According to the SEC complaint, VW issued more than $13 billion in corporate bonds and securities in the US market between April 2014 and May 2015 when the company knew they had more than half a million vehicles on US roads that violated US vehicle-emissions limits.
The fraud element of the complaint is that the company knew these vehicles opened up VW to substantial liability to the company’s reputation and financial position, facts that were not disclosed to buyers and thereby perpetrating a fraudulent sale of these bond and securities.
Volkswagen Responds to SEC Complaint
Volkswagen for its part challenged the SEC complaint as flawed. In a statement to CNBC, the company said: “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.”