VW Shares Steady After SEC Suit.
“VW said the suit was legally, factually flawed and it would contest it”
Volkswagen shareholders reacted calmly after news the U.S. Securities and Exchange Commission (SEC) charged the company and former CEO Martin Winterkorn with defrauding U.S. bond holders.
Perhaps some shareholders thought the fall-out from the dieselgate scandal had run its course, but the new lawsuit from the SEC raised the prospect of another big payout. The suit didn’t mention any dollar value sought as punishment.
On European stock markets Friday, VW shares actually rose a bit – plus just under 1% – while the auto sector as measured by the Stoxx Europe 600, was up 1.2% around midday.
The SEC alleged in its complaint that from April 2014 to May 2015 VW issued more than $13 billion in bonds and asset-backed securities on the U.S. market when the company knew that more than 500,000 vehicles in the U.S. exceeded legal vehicle-emissions limits which would expose the company to huge financial and reputational damage.
VW said the suit was legally and factually flawed and it would contest it.
The dieselgate emissions cheating scandal emerged in September 2015 when VW admitted about 11 million of its diesels around the world sidestepped noxious emissions rules. VW has so far paid about $25 billion in fines and compensation.
The SEC demanded permanent injunctions that VW not to do it again, and compensation for bond holders’ losses. It didn’t say how much money was involved.
Volkswagen told the annual press conference earlier this week in Wolfsburg, Germany that it had earmarked a total of 29 billion euros ($33 billion) for dieselgate compensation.