The Securities and Exchange Commission is charging Volkswagen and former CEO Martin Winterkorn with defrauding American investors during an emissions scandal, The Associated Press reported Friday.

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.

Volkswagen did not immediately respond to The Associated Press early Friday.

On Thursday, 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.

Volkswagen said the SEC complaint "is legally and factually flawed." Reuters reported that a lawyer for Winterkorn could not immediately be reached early Friday.

VW had said in its annual report that the SEC could take enforcement action against the company over the German automaker's involvement in the emissions scandal.

The automaker said the agency is "piling on" and that the agency's complaint is without merit.

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.

Here is Volkswagen's full statement to CNBC:

The SEC's complaint is legally and factually flawed, and Volkswagen will contest it vigorously. The SEC has brought an unprecedented complaint over securities sold only to sophisticated investors who were not harmed and received all payments of interest and principal in full and on time. The SEC does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with U.S. emissions rules when these securities were sold, but simply repeats unproven claims about Volkswagen AG's former CEO, who played no part in the sales. Regrettably, more than two years after Volkswagen entered into landmark, multibillion-dollar settlements in the United States with the Department of Justice, almost every state and nearly 600,000 consumers, the SEC is now piling on to try to extract more from the company.

— The Associated Press and Reuters contributed to this report.</s>The Securities and Exchange Commission alleged in a court filing that Volkswagen had "perpetrated a massive fraud" and repeatedly lied to U.S. investors who bought bonds and other securities.

The regulator is suing Volkswagen and its former chief executive Martin 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.

Volkswagen said the SEC complaint "is legally and factually flawed."

VW had said in its annual report that the SEC could take enforcement action against the company over the German automaker's involvement in the "dieselgate" emissions scandal.

The automaker said the agency is "piling on" and that the agency's complaint is without merit.

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. emission standards when it issued certain securities to investors.

The SEC can issue fines and other civil penalties for violations of securities law.

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.

Here is Volkswagen's full statement to CNBC:

The SEC's complaint is legally and factually flawed, and Volkswagen will contest it vigorously. The SEC has brought an unprecedented complaint over securities sold only to sophisticated investors who were not harmed and received all payments of interest and principal in full and on time. The SEC does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with U.S. emissions rules when these securities were sold, but simply repeats unproven claims about Volkswagen AG's former CEO, who played no part in the sales. Regrettably, more than two years after Volkswagen entered into landmark, multibillion-dollar settlements in the United States with the Department of Justice, almost every state and nearly 600,000 consumers, the SEC is now piling on to try to extract more from the company.</s>US authorities have taken legal action against Volkswagen and its former chief executive, Martin Winterkorn, over the German car maker's diesel emissions scandal, accusing the company of perpetrating a "massive fraud" on US investors.

The US Securities and Exchange Commission said in its civil complaint filed in San Francisco late on Thursday that, from April 2014 to May 2015, Volkswagen issued more than $13bn (£9bn) in bonds and asset-backed securities in US markets at a time when senior executives knew that more than 500,000 diesel vehicles in the US exceeded legal vehicle emissions limits.

VW "reaped hundreds of millions of dollars in benefit by issuing the securities at more attractive rates...</s>The top securities agency in the United States has accused Volkswagen of undertaking a “massive fraud” and lying to investors, the latest in an ongoing diesel emissions scandal that has beleaguered the German carmaker.

The Securities and Exchange Commission said late Thursday that it was suing Volkswagen and Martin Winterkorn, its former chief executive, in a case related to a decade-long scheme undertaken by one of the world’s biggest carmakers to fudge its diesel emissions testing.

The agency is seeking to bar Mr. Winterkorn from being an executive director of any publicly listed company in the United States. It is also seeking to recover what it called “ill-gotten gains” from Volkswagen. Federal prosecutors criminally charged Mr. Winterkorn in 2018 with conspiring to hide the emissions cheating, elevating the scandal at the automaker to the very top of its management.</s>The Securities and Exchange Commission is suing Volkswagen and its former chief executive Martin Winterkorn over the German automaker's diesel emissions scandal, alleging a "massive fraud" on U.S. investors.

VW was caught using illegal software to cheat U.S. pollution tests in 2015, triggering a global backlash against diesel that and has so far cost it $32.8 billion.

Regulators and investors argue VW should have informed them sooner about the scope of the scandal, while VW says it was not clear it would face billions of dollars in fines and penalties as others had paid out much lower sums for similar offenses.

The SEC said in its civil complaint on Thursday that from April 2014 to May 2015, VW 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.

VW "reaped hundreds of millions of dollars in benefit by issuing the securities at more attractive rates for the company," the SEC said, adding it "repeatedly lied to and misled United States investors, consumers, and regulators as part of an illegal scheme to sell its purportedly 'clean diesel' cars and billions of dollars of corporate bonds and other securities in the United States."

The suit filed in San Francisco seeks to bar Winterkorn from serving as an officer or director of a public U.S. company and recover "ill-gotten gains" along with civil penalties and interest.

Winterkorn, who resigned days after the scandal became public in September 2015, was charged by U.S. prosecutors in 2018 and accused of conspiring to cover up the German automaker's diesel emissions cheating.

A lawyer for Winterkorn, who remains in Germany, declined to comment on the SEC action.

VW said in a statement the SEC complaint "is legally and factually flawed, and Volkswagen will contest it vigorously. The SEC has brought an unprecedented complaint over securities sold only to sophisticated investors who were not harmed and received all payments of interest and principal in full and on time."

The automaker added that the SEC "does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with U.S. emissions rules when these securities were sold" but repeats claims about Winterkorn "who played no part in the sales."

German markets regulator Bafin could not be reached for comment about whether it was working with the SEC.

VW has spent billions to pay claims from United States-based VW owners, environmental regulators, states and dealers, and has offered to buy back about 500,000 polluting U.S. vehicles. That figure included $4.3 billion in U.S. criminal and civil fines.

But the SEC said VW "has never repaid the hundreds of millions of dollars in benefit it fraudulently obtained."

VW admitted to secretly installing software in 500,000 U.S. vehicles to cheat government exhaust emissions tests and pleaded guilty in 2017 to felony charges. 13 people have been charged in the United States, including Winterkorn and four Audi managers.

Critics argue that VW should have informed investors on September 3, 2015 about having used a "defeat device" to cheat emissions tests, the same day that VW managers admitted to using illegal software to U.S. regulators.

Investors were informed about VW's diesel cheating after U.S. regulators blew the whistle on September 18, 2015.

VW argues it did not have to inform investors earlier because it did not believe it was facing significant fines.</s>WASHINGTON/FRANKFURT (Reuters) - The U.S. Securities and Exchange Commission (SEC) is suing Volkswagen (VW) and its former chief executive Martin Winterkorn over the German automaker’s diesel emissions scandal, alleging a “massive fraud” on U.S. investors.

VW was caught using illegal software to cheat U.S. pollution tests in 2015, triggering a global backlash against diesel that and has so far cost it 29 billion euros ($32.8 billion).

Regulators and investors argue VW should have informed them sooner about the scope of the scandal, while VW says it was not clear it would face billions of dollars in fines and penalties as others had paid out much lower sums for similar offences.

The SEC said in its civil complaint on Thursday that from April 2014 to May 2015, VW 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.

VW “reaped hundreds of millions of dollars in benefit by issuing the securities at more attractive rates for the company,” the SEC said, adding it “repeatedly lied to and misled United States investors, consumers, and regulators as part of an illegal scheme to sell its purportedly ‘clean diesel’ cars and billions of dollars of corporate bonds and other securities in the United States.”

The suit filed in San Francisco seeks to bar Winterkorn from serving as an officer or director of a public U.S. company and recover “ill-gotten gains” along with civil penalties and interest.

Winterkorn, who resigned days after the scandal became public in September 2015, was charged by U.S. prosecutors in 2018 and accused of conspiring to cover up the German automaker’s diesel emissions cheating.

A lawyer for Winterkorn, who remains in Germany, declined to comment on the SEC action.

VW said in a statement the SEC complaint “is legally and factually flawed, and Volkswagen will contest it vigorously. The SEC has brought an unprecedented complaint over securities sold only to sophisticated investors who were not harmed and received all payments of interest and principal in full and on time.”

The automaker added that the SEC “does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with U.S. emissions rules when these securities were sold” but repeats claims about Winterkorn “who played no part in the sales”.

German markets regulator Bafin could not be reached for comment about whether it was working with the SEC.

VW has spent billions to pay claims from United States-based VW owners, environmental regulators, states and dealers, and has offered to buy back about 500,000 polluting U.S. vehicles. That figure included $4.3 billion in U.S. criminal and civil fines.

But the SEC said VW “has never repaid the hundreds of millions of dollars in benefit it fraudulently obtained.”

VW admitted to secretly installing software in 500,000 U.S. vehicles to cheat government exhaust emissions tests and pleaded guilty in 2017 to felony charges. 13 people have been charged in the United States, including Winterkorn and four Audi managers.

The SEC suit also names VW’s VW Credit and Volkswagen Group of America Finance LLC, the entity used to sell the securities.

Critics argue that VW should have informed investors on September 3, 2015 about having used a “defeat device” to cheat emissions tests, the same day that VW managers admitted to using illegal software to U.S. regulators.

Investors were informed about VW’s diesel cheating after U.S. regulators blew the whistle on September 18, 2015.

VW argues it did not have to inform investors earlier because it did not believe it was facing significant fines.

VW’s management had sought to strike a deal with U.S. regulators behind closed doors, a process that would lead costs to be “controllable overall with a view to the business activities of Volkswagen Group,” a VW document showed.

A defense filing made with the Braunschweig court says VW’s chief financial officer was informed that there was a potential problem with United States authorities on September 14, 2015.

At the time, VW believed it could fix polluting vehicles with a software update and gauged the potential financial risk to be around 150 million euros, the Braunschweig document shows.</s>WASHINGTON: The US Securities and Exchange Commission sued Volkswagen AG and its former chief executive Martin Winterkorn over the German automaker’s diesel emissions scandal, accusing the company of perpetrating a “massive fraud” on US investors.

 The SEC said in its civil complaint filed in San Francisco late on Thursday that from April 2014 to May 2015, Volkswagen issued more than $13 billion in bonds and asset-backed securities in US markets at a time when senior executives knew that more than 500,000 US diesel vehicles grossly exceeded legal vehicle emissions limits.

 Volkswagen “reaped hundreds of millions of dollars in benefit by issuing the securities at more attractive rates for the company,” the SEC said, adding VW “repeatedly lied to and misled United States investors, consumers, and regulators as part of an illegal scheme to sell its purportedly ‘clean diesel’ cars and billions of dollars of corporate bonds and other securities in the United States.” The suit seeks to bar Winterkorn from serving as an officer or director of a public US company and recover “ill-gotten gains” along with civil penalties and interest.

 Winterkorn, who resigned days after the scandal became public in September 2015, was charged by US prosecutors in 2018 and accused of conspiring to cover up the German automaker’s diesel emissions cheating.

 He remains in Germany.

 Volkswagen said in a statement the SEC complaint “is legally and factually flawed, and Volkswagen will contest it vigorously. The SEC has brought an unprecedented complaint over securities sold only to sophisticated investors who were not harmed and received all payments of interest and principal in full and on time.”

 The automaker added that the SEC “does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with US emissions rules when these securities were sold” but repeats claims about Winterkorn “who played no part in the sales”.

 A lawyer for Winterkorn could not immediately be reached early on Friday.

 Volkswagen has agreed to pay more than $25 billion in the United States in connection with the three-and-a-half-year old scandal, paying claims from owners, environmental regulators, states and dealers, and has offered to buy back about 500,000 polluting US vehicles. That figure included $4.3 billion in US criminal and civil fines.

 But the SEC said VW “has never repaid the hundreds of millions of dollars in benefit it fraudulently obtained.” VW admitted in September 2015 to secretly installing software in 500,000 US vehicles to cheat government exhaust emissions tests and pleaded guilty in 2017 to felony charges. In total, 13 people have been charged in the United States, including Winterkorn and four Audi managers.

 The SEC action also names Volkswagen arm VW Credit and Volkswagen Group of America Finance LLC, the entity used to sell the securities. — Reuters</s>The German automotive group has come under huge public and regulatory pressure as a result of the diesel emissions scandal JOHN MACDOUGALL /Getty

America’s securities watchdog has unexpectedly opened a new front in the Dieselgate scandal by accusing Volkswagen and its former boss of defrauding bond investors.

The US Securities and Exchange Commission said yesterday that VW and Martin Winterkorn had sold $13 billion of bonds and other asset-backed securities while failing to disclose that the car group’s diesel vehicles grossly exceeded federal emissions limits, ultimately causing investors to lose hundreds of millions of dollars.

About 11 million VW vehicles, including half a million in America, were secretly and deliberately equipped with “defeat devices” that allowed them to cheat diesel emissions tests. VW admitted the existence of the devices in 2015 during an investigation by the US environment watchdog and Mr Winterkorn resigned soon after.</s>Washington, D.C.--(Newsfile Corp. - March 15, 2019) - The Securities and Exchange Commission today 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 that more than 500,000 vehicles in the United States grossly exceeded legal vehicle emissions limits, exposing the company to massive financial and reputational harm. The complaint alleges that Volkswagen made false and misleading statements to investors and underwriters about vehicle quality, environmental compliance, and VW's financial standing. 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, according to the complaint.

"Issuers availing themselves of American capital markets must provide investors with accurate and complete information," said Stephanie Avakian, Co-Director of the 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 SEC's complaint, filed in the U.S. District Court for the Northern District of California, 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 SEC complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties. The complaint also seeks an officer and director bar against Winterkorn.

The SEC's investigation was conducted by Kevin Wisniewski, Jake Schmidt, Amy Flaherty Hartman, and Daniel Nigro of the Complex Financial Instruments Unit and the Chicago Regional Office, under the supervision of Jeffrey Shank and Daniel Michael, Chief of the Enforcement Division's Complex Financial Instruments Unit. The litigation is being led by Daniel Hayes.</s>Volkswagen and its former chief executive have been sued by the US Securities and Exchange Commission over claims they failed to disclose to investors that diesel vehicles violated emission standards.

It is the latest twist in a software cheating scandal that has cost the company $30bn (€26.4bn).

The German carmaker sold billions of dollars of corporate bonds and asset-backed securities in the US, from 2010 to 2015, while concealing its emissions-cheating scheme, according to the complaint filed by the regulator in San Francisco’s federal court.

The case, also filed against ex-CEO Martin Winterkorn, could give fresh impetus to similar efforts for redress from European investors.

“The investors did not know that VW was lying to consumers to fool them into buying its ‘clean diesel’ cars and lying to government authorities, in order to sell cars in the US that did not comply with US emission standards,” the SEC alleged.

VW said the SEC complaint is “legally and factually flawed” and the company will “contest it vigorously.”

It accused the Commission of “piling on to try to extract more from the company”, more than two years after settlements with the Justice Department.

“The SEC has brought an unprecedented complaint over securities sold only to sophisticated investors, who were not harmed and received all payments of interest, and principal, in full and on time,” spokesman Christopher Hauss said.

“The SEC does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with US emissions rules, when these securities were sold, but simply repeats unproven claims about Volkswagen’s former CEO, who played no part in the sales,” he added.

Allegations that VW wrongfully withheld information about the emission software used in its diesel cars have loomed over the company since the scandal first broke, in 2015. The crisis involved as many as 11m diesel cars worldwide and has cost the Wolfsburg-based company €28bn.

A court in the German city of Braunschweig is assessing a group action, covering suits brought by thousands of investors with claims totaling more than €9bn. It has scheduled the next hearing for March 25.

German prosecutors are also carrying out a criminal investigation into whether current chief executive, Herbert Diess, chairman, Hans Dieter Poetsch, and Mr Winterkorn informed investors too late about VW’s diesel breaches and their potential impact.
The Securities and Exchange Commission alleges in a court filing that Volkswagen has "perpetrated a massive fraud" and repeatedly lied to U.S. investors in connection with diesel emissions.