VW board accused of market manipulation
June 21, 2016
News agency Reuters reports that BaFin, Germany's financial supervisory authority, has filed a complaint against the entire VW board at the time the Dieselgate scandal broke, citing possible market manipulation.
This comes just one day before VW is set to put forth a motion at its annual shareholders meeting to clear its board and oversight committee of wrongdoing in connection with the scandal. Inside sources told Reuters that doubt is now being cast over whether the motion will pass.
BaFin can receive complaints from individuals and organizations regarding violations of German financial law, which it then reviews and decides whether the complaint deserves a formal investigation.
Prosecutors from the German town of Braunschweig launched such an investigation yesterday against former VW chief executive Martin Winterkorn and an unidentified second executive, widely believed to be current brand chief Herbert Diess, on charges of market manipulation.
A spokesperson for the prosecutor's office declined to say exactly how many people were now being investigated. "This is an ongoing procedure and the number of suspects is not cast in stone," he said.
According to German law, publically traded companies are required to inform their shareholders of impending issues that could have a large impact on the company's financial position.
A source close to the proceedings says BaFin has brought the entire board under suspicion, as it had a "collective responsibility" to disclose damaging information.
Both current VW chief executive Matthias Müller and chief financial officer Hans Dieter Pötsch were board members at the time.
A matter of time
VW informed shareholders of its so-called Dieselgate scandal the same day last September that it admitted to using emissions test cheating software in millions of its vehicles.
Some former VW employees report the company had known of the manipulation for years before US regulators discovered it. In April, VW said that it discovered last summer that the software may not comply with US environmental law, and it maintained that it did not expect that it would create such a deep impact.
The carmaker estimated in April that Dieselgate will cost the company around $18.2 billion (16.2 billion euros).
In a statement released Monday after the investigation was launched, VW said prosecutors had brought forth no new incriminating evidence. It has conducted investigations into the scandal with outside firms that it says have turned up nothing incriminating to date.
US investors get involved
Also on Tuesday, the law firm Quinn Emanuel, representing a large pension fund for California teachers as well as other institutional investors, filed a lawsuit with the Braunschweig district court against VW for damages caused by the Dieselgate scandal.
Quinn Emanuel claimed that the long-term-oriented investors had bought VW stocks at an inflated price.
Nadine Herrmann, a lawyer with the firm, called the case a litmus test for German capital market law. If there was ever a scandal requiring the implementation of investors' rights regarding receiving proper market information, "this is certainly the case," she said.
jtm/uhe (dpa, Reuters)