SEC Charges Volkswagen, Former CEO With Defrauding Bond Investors During "Clean Diesel" Emissions Fraud
The SEC charged Volkswagen AG, its subsidiaries, and former CEO Martin Winterkorn with defrauding U.S. investors by concealing a decade-long emissions cheating scheme while raising over $13 billion in bonds, gaining hundreds of millions in illicit benefits, and now faces seeks injunctions, disgorgement, penalties, and a director bar against Winterkorn.
The SEC charged Volkswagen AG, Volkswagen Group of America Finance, LLC, VW Credit, Inc., and former CEO Martin Winterkorn with violating federal antifraud securities laws by concealing that over 500,000 U.S. vehicles exceeded legal emissions limits while issuing more than $13 billion in bonds and asset-backed securities between April 2014 and May 2015. Executives made false statements about environmental compliance and financial health, enabling Volkswagen to secure financing at artificially favorable rates and gain hundreds of millions of dollars in illicit benefits. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and an officer-and-director bar against Winterkorn, with litigation led by Daniel Hayes in the Northern District of California.
The SEC charged Volkswagen AG, its subsidiaries Volkswagen Group of America Finance, LLC and VW Credit, Inc., and former CEO Martin Winterkorn with defrauding U.S. investors by deliberately concealing a decade-long emissions cheating scheme while raising over $13 billion in corporate bonds and asset-backed securities in the U.S. markets between April 2014 and May 2015. Senior executives knew that more than 500,000 vehicles in the United States grossly exceeded legal emissions limits, yet they made false and misleading statements to investors and underwriters regarding vehicle environmental compliance, quality, and the company’s financial standing. By hiding the emissions scandal, Volkswagen secured financing at more attractive interest rates, reaping hundreds of millions of dollars in illicit financial benefits. The SEC’s complaint, filed in the U.S. District Court for the Northern District of California, alleges violations of the antifraud provisions of federal securities laws. The agency is seeking permanent injunctions, disgorgement of all ill-gotten gains with prejudgment interest, civil penalties, and an officer-and-director bar against Winterkorn. The investigation was conducted by the SEC’s Complex Financial Instruments Unit and Chicago Regional Office, under the supervision of Jeffrey Shank and Daniel Michael, with litigation led by Daniel Hayes. This case underscores the SEC’s enforcement priority that issuers accessing U.S. capital markets must provide accurate and complete information to investors.
Exhibits & Attached Documents (1)
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- $13.00B $13 billion ≥$1B
- person daniel hayes
- company more than $13 billion in bonds and asset-backed securities
- agency sec complaint
- agency sec investigation
- agency Securities and Exchange Commission
- person volkswagen ag
- SEC Charged Volkswagen AG, Subsidiaries, and Martin Winterkorn
- Volkswagen AG Defrauded U.S. Investors
- Volkswagen AG Issued More Than $13 Billion in Bonds and Asset-Backed Securities
- Volkswagen AG Made False and Misleading Statements
- Volkswagen AG Reaped Hundreds of Millions of Dollars in Benefit
- Volkswagen AG Hid Decade-Long Emissions Scheme
- SEC Complaint Charges Volkswagen AG, Subsidiaries, and Winterkorn
- SEC Complaint Seeks Permanent Injunctions, Disgorgement, and Civil Penalties
- SEC Complaint Seeks Officer and Director Bar Against Winterkorn
- Kevin Wisniewski, Jake Schmidt, Amy Flaherty Hartman, and Daniel Nigro Conducted SEC Investigation
- Daniel Hayes Leads Litigation
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.
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.