SEC Charges Volkswagen, Former CEO with Defrauding Investors

The complaint alleges that Volkswagen made false and misleading statements to investors and underwriters about vehicle quality, environmental compliance, and VW's financial standing and that, by concealing the emissions scheme, Volkswagen obtained hundreds of millions of dollars in benefit by issuing the securities at more attractive rates for the company.

The federal Securities and Exchange Commission has charged Volkswagen AG, two of its subsidiaries, and its former CEO, Martin Winterkorn for defrauding U.S. investors, raising billions of dollars through the corporate bond and fixed-income markets while making a series of deceptive claims about the environmental impact of the company's "clean diesel" fleet. According to the SEC's complaint, from April 2014 to May 2015, Volkswagen issued more than $13 billion in bonds and asset-backed securities in the U.S. markets at a time when senior executives knew more than 500,000 vehicles in the United States significantly exceeded legal vehicle emissions limits, thus exposing the company to massive financial and reputational harm, according to the federal agency.

The complaint alleges that Volkswagen made false and misleading statements to investors and underwriters about vehicle quality, environmental compliance, and VW's financial standing and that, by concealing the emissions scheme, Volkswagen obtained hundreds of millions of dollars in benefit by issuing the securities at more attractive rates for the company.

"Issuers availing themselves of American capital markets must provide investors with accurate and complete information," said Stephanie Avakian, co-director of the SEC Division of Enforcement. "As we allege, Volkswagen hid its decade-long emissions scheme while it was selling billions of dollars of its bonds to investors at inflated prices."

The complaint was filed in the U.S. District Court for the Northern District of California. It charges Volkswagen AG, its subsidiaries Volkswagen Group of America Finance, LLC and VW Credit, Inc., and Winterkorn with violating the antifraud provisions of the federal securities laws. The complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties, as well as seeking an officer and director bar against Winterkorn.

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