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SEC charges Volkswagen, former CEO with lying to investors  3 Months ago

Source:   USA Today  

The U.S. Securities and Exchange Commission charged Volkswagen Group and former CEO Martin Winterkorn with deceiving investors about the company's vehicle quality, compliance and finances before its emissions scandal erupted.

The SEC charges, filed late Thursday, mark the latest in a cascading series of legal crises for VW following its admission that it rigged about 11 million vehicles worldwide with software to cheat emissions tests.

The Wall Street regulatory agency accused the German automaker of defrauding investors by selling bonds at inflated prices and lying to them about the state of the company. The accusations cover actions from April 2014 to May 2015. The scandal was first publicized in September 2015.

The SEC asked a federal judge in California to order VW and Winterkorn to pay penalties and force them to give back ill-gotten gains. It also asked the court to block Winterkorn from serving as an executive or board member of a publicly traded company.

That was already unlikely since Winterkorn is facing a separate criminal indictment in the U.S. Winterkorn, who has not returned to the U.S. since the indictment was issued, resigned from VW shortly after the scandal was revealed. He has maintained his innocence.

The SEC complaint accuses VW of issuing more than $13 billion in bonds and securities in the U.S. during a period in which executives knew about the scandal but said nothing to the company's backers.

"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 statement.

VW spokesman Christopher Hauss said the SEC action 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," Hauss said. "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."

Volkswagen's emissions scandal has already cost the company more than $30 billion in various fines and settlements, including vehicle buybacks and compensation programs in the U.S.

The company also agreed to a criminal settlement, and several executives have faced criminal charges as individuals. Now, the SEC is "piling on to try to extract more from the company," Hauss said.

At one point before a buyback program that helped get the cars off the road, some VW cars were emitting harmful pollutants at rates of as much as 40 times more than U.S. standards.

The automaker has repeatedly apologized for the scandal and pledged to do better. The company has since pivoted toward a massive investment in electric vehicles, which do not cause emissions.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

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