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SEC charges Volkswagen and its former CEO with defrauding investors

The Securities and Exchange Commission is charging Volkswagen and former CEO Martin Winterkorn with defrauding American investors during an emissions scandal.  The complaint claims Volkswagen made false and misleading statements to investors and underwriters about vehicle quality, environmental compliance and the company’s financial standing, which gave Volkswagen a financial benefit when it issued securities at more attractive rates for the company.

The SEC 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 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.

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. emissions standards when it issued certain securities to investors.

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.

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