SEC charges Volkswagen, former boss with fraud, investor deception

SEC charges Volkswagen, former boss with fraud, investor deception

Mubasher:  The top US securities agency accused Volkswagen and its former CEO Martin Winterkorn of carrying out “a massive fraud” and deceiving investors about the company's vehicle quality, compliance and finances before an on-going diesel emissions scandal.

The US Securities and Exchange Commission (SEC) filed a complaint in a federal court in San Francisco, in relation to $13 billion in bonds and other securities that the car giant issued in 2014 and 2015.

This came on allegations that Volkswagen made false and misleading claims about its financial health and environmental credentials to sell the securities at inflated prices.

The market regulator claimed that top executive had prior knowledge, when the securities were sold, that over 500,000 vehicles in the US breached emissions standards.

“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 statement.

In response, a Volkswagen spokesman said on Friday that the complaint was “legally and factually flawed, and [the auto maker] will contest it vigorously.”

The securities were “sold only to sophisticated investors, who were not harmed and received all payments of interest and principal in full and on time,” the spokesman added.

Volkswagen admitted in 2015 to cheating of carbon dioxide emissions tests using special software installed in millions of vehicles worldwide. The carmaker paid over $30 billion in penalties in what is known as the “dieselgate” scandal.