WASHINGTON • The United States Securities and Exchange Commission (SEC) sued Volkswagen and its former chief executive Martin Winterkorn over the German automaker's diesel emissions scandal late on Thursday, accusing the company of perpetrating a "massive fraud" on US investors.
The SEC said in its complaint filed in San Francisco that from April 2014 to May 2015, Volkswagen issued more than US$13 billion in bonds and asset-backed securities in US markets at a time when senior executives knew that more than 500,000 diesel vehicles sold in the US 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", said the SEC.
The suit seeks to bar Winterkorn from serving as an officer or director of a public US company and recover "ill-gotten gains". Winterkorn was charged by US prosecutors last year and accused of conspiring to cover up the German automaker's diesel emissions cheating.
He remains in Germany.
Volkswagen said 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".
Volkswagen has agreed to pay more than US$25 billion (S$34 billion) in the US in connection with the 31/2-year scandal, paying claims from owners, environmental regulators, states and dealers, and has offered to buy back about 500,000 polluting vehicles in the US.
Volkswagen admitted in September 2015 to secretly installing software in 500,000 vehicles in the US to cheat government exhaust emissions tests and pleaded guilty in 2017 to felony charges. In total, 13 people have been charged in the US, including Winterkorn and four Audi managers.
A lawyer for Winterkorn could not immediately be reached yesterday.
The SEC action also names Volkswagen Credit.