Sun, January 29, 2023

SEC: U.S SEC Shields Volkswagen Suit after Emission Scandal

Flags with VW logo against blue sky.

On Monday, when a judge questioned the agency why it had waited two years to charge Volkswagen AG after a global scandal connected to vehicle emissions, the U.S. Securities and Exchange Commission defended the pace of its examination.

In March, the former chief executive, Martin Winterkorn accused Volkswagen of defrauding investors in U.S. bond offerings.

In 2015, a German automaker was caught cheating on U.S pollution test with illegal software.

It caused a global response versus diesel vehicles, so far costing it 30 billion euros in charges, penalties, and buybacks.

In May, it has put aside a 5.5 billion additional euros in possible liabilities.

US District Judge Charles Breyer probed the SEC in May for its “lateness” in prosecuting VW for more than 2 years.

The incident happened after the German automaker established the U.S. Justice Department’s criminal investigation. Also, three offenses were pleading guilty and should pay $4.3 billion in penalties.

Breyer stated, “My basic question is what took you so long.” Also, he said he was “totally mystified,” referring to why the SEC waited until 2019.

The SEC disclosed the details of the investigation in the court filings. Also, it has held a general settlement talk with Volkswagen before deciding to file a charge.

The VW gave SEC about 2 million pages of records. Afterwards, it immediately put off distributing formal orders when it decided to produce materials willingly.

Statements and Filings

U.S. Securities and Exchange Commission logo.

On Monday, on its court filing, the SEC said, “staff worked hard and as quickly as possible under challenging circumstances to complete an investigation.”

Lastly, it has added it has “treated VW fairly and afforded the company full process throughout its investigation.”

Referring to the challenges, the agency has stated, “(They) included long delays by VW in producing documents and other information,”

Furthermore, there were “uncooperative witnesses who were reluctant or altogether refused to speak to the staff.”

On Monday, in a statement VW had, it said, “cooperated fully with the SEC’s investigation, and today’s filing confirms that the SEC is now piling on.”

In January 2017, the Justice Department and the company has resolved the matter of asset-backed securities.

Moreover, with the settlement, it has said, “obtained a broad release, including from fraud and misrepresentation claims.”

The SEC filing also said that the VW bond sales did not receive investigations. That happened “even though private bondholders had sued Volkswagen over those bonds in June 2016.”

However, VW defended itself. Regarding the filing, it said, “Volkswagen has never missed an interest or principal payment for any of its bonds, which always remained investment grade.”

The former CEO of Volkswagen America, Michael Horn, declined to be interrogated by the SEC even if he told his lawyers in September 2017 the U.S. Justice Department would be willing to offer Horn safe way.

Winterkorn did not agree to an interview with the SEC.

The settlement talks that SEC had over several months gave VW and Winterkorn’s lawyers an opportunity to argue why the SEC should not file suit.

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