By on March 15, 2019

tdiengine

While three and a half years have passed since the Volkswagen diesel scandal broke, its reverberations are still being felt. For the automaker turned green soothsayer, this usually comes with financial hardship attached, plus the requisite regurgitation of a past VW would like to see forgotten.

The latest salvo launched at VW over its emissions-rigged cars comes from the U.S. Securities and Exchange Commission, which is suing the company — as well as its former CEO, Martin Winterkorn — for the “massive fraud” it says VW perpetrated on investors.

The civil complaint, filed Thursday, argues that VW and its leadership should have informed investors that the company was about to take a massive hit. While the exact story of “who knew what and when,” it’s clear the automaker knew a reckoning was in the works. Just how big of one is up for debate.

Ultimately, the fines, penalties, and recalls cost VW more than $30 billion and sparked its transformation into an automaker that, just this week, promised 22 million electric vehicles on the road within a decade.

But the SEC isn’t concerned with VW’s EV ambitions and new persona. It wants penance for the $13 billion in bonds and asset-backed securities the company issued in the U.S. from April 2014 to May 2015.

Volkswagen “reaped hundreds of millions of dollars in benefit by issuing the securities at more attractive rates for the company,” the SEC suit said, as reported by Reuters. The regulator claims 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 SEC singles out Winterkorn, too. The former CEO, who hit the road days after the scandal broke in September 2015, was indicted by U.S. prosecutors last year for his alleged role in violating the Clean Air Act with a fleet of polluting vehicles outfitted with “defeat devices” in order to fool Environmental Protection Agency testers.

The suit seeks to collect the German national’s “ill-gotten gains” while also imposing penalties and preventing him from ever serving as an officer or director of a U.S. company.

Of course, Volkswagen’s having none of this. It fired back at the SEC, saying the regulator’s suit was based on “legally and factually flawed” information.

“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 stated, adding that the people issuing the bonds had no way of knowing the company’s vehicles were rolling bundles of illegality.

In addition to an expensive recall and buyback program, VW was forced to cough up $4.3 billion in fines in the United States.

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13 Comments on “More Legal Trouble for Volkswagen, Former CEO...”


  • avatar
    SCE to AUX

    “preventing him from ever serving as an officer or director of a U.S. company”

    I doubt that’s a serious concern, but ok.

  • avatar
    bullnuke

    In other news: Rivian is waiting for VW to remove several hundred stored returned TDI’s from the lot at their Normal, Illinois plant.

    • 0 avatar
      Oberkanone

      Are you sure? I did not see them stored there anymore. There were about 14,000 in 2017.
      In 2017 there were many TDI in storage at this location. Vascor Logistics was contracted with Rivian for use of the site.

      bullnuke – when did you see these TDI on site at Rivian?

      • 0 avatar
        bullnuke

        There was a news article last week from the local paper talking up Rivian with pictures showing the lots full of TDI’s – perhaps that local paper was using old photos. The Google overhead, of course, is years out of date.

  • avatar
    redapple

    What a shame.
    TDI love.

    Give me back my TDI. I ll plant 10 trees. Pay 1000$ for carbon offsets.

    All good.

    • 0 avatar
      DedBull

      These cars are being retrofitted and returned to the market, hundreds are sold through ADESA (dealer auction) each week nationwide. My mother now drives a retrofitted 15 Jetta TDI 6spd.

  • avatar
    Mike-NB2

    I agree 100% with redapple above.

    I’m starting this intending it to be a reasoned comment but I know it’ll quickly turn into a rant.

    The TDI ‘scandal’ is once again turning into a witch hunt. I wonder if VW was an American company would they be facing all this crap? GM got off light on its flawed ignition switch problem and there were FATALITIES with that one. Yes, I know that NOx has health effects. Come closer Greenie so I can hit you with this stout tree branch.

    I had a 2013 Passat TDI and after the scandal broke I was walking to my car one day when a Dodge Ram diesel went by me. The exhaust was slightly modified and the truck was clearly not a commercial vehicle. Here’s a guy with a modded Ram HD that he uses to take his daughter to swimming lessons who burns three times the fuel and dumps tons of emissions out but he’s perfectly legal. Meanwhile, I’m a massive polluter and a scourge on humanity by driving my mid-size car that gets better fuel economy than most sub-compacts.

    I realize that my TDI love probably makes me immune to logic on this issue.

    I gave my Passat back in the settlement not because I really wanted to but because it didn’t make sense to do otherwise. I got about 90% of the purchase price on a four year old car. That kind of deal won’t come along again so I took it.

    Coincidentally, I’m currently driving a 2015 Passat TDI as a loaner from the VW dealer as we wait for the first GLIs to roll off the truck. I sold my car on Wednesday in preparation for that deal to come through. It took me less than a second behind the wheel to remember how much of a TDI fan I am. My fuel burn on Monday in my ’17 MKZ 3.0L was double what I burned on Friday in the Passat. Of course there is a bit of a trade off in performance…

    Now if VW Canada would get off their asses and launch the GLI soon…

    • 0 avatar
      George B

      Mike-NB2, we don’t have to wonder what would happen with GM and diesel emissions. They offer the Chevrolet Cruze diesel complete with the hardware to meet current pollution standards and it makes the car too expensive to be desirable for most US buyers. GM knew that cheating EPA regulations as blatantly as Volkswagen did would be fatal. GM, Ford, and FCA attempt to interpret EPA rules in ways to allow them to reduce DEF consumption or achieve slightly higher fuel economy, but they know better than to leave out necessary emissions control hardware.

    • 0 avatar
      Lorenzo

      I have to agree/disagree with the witch hunt term. It’s more like piling on, with everyone harmed in any way, real or imagined, to any degree, lining up for their lottery payoff. The principle involved in banning double jeopardy in criminal cases apparently doesn’t apply to civil actions.

      I’m especially skeptical of the SEC responding to an investor complaint. The bonds were sold with a repayment schedule. Bond prices always fluctuate, and as long as the repayment schedule is met, there should be no complaint.

      If the complainant was depending on selling the bond at a higher price than he paid, he’s a speculator, not an investor. There’s no guarantee of bond value, only repayment, and the SEC should ignore the complaint.

  • avatar
    Null Set

    The difference between VW’s diesel emissions scandal, and GM’s ignition switch death trap, and the US government’s response to them, is simple. One just has to be appropriately cynical. In VW’s case, they fooled and *publicly* embarrassed the US government itself. In GM’s case, they just killed ordinary citizens. Hell hath no fury like a government agency embarrassed in public.

    • 0 avatar
      SCE to AUX

      No, the difference is this:

      GM was incompetent, but VW was intentional.

      It makes a big difference.

      • 0 avatar
        Null Set

        In what way was GM’s refusal to the fix the fault after it was discovered, for years, even though it knew it was killing people, AND its persistence in fighting victims tooth and claw in court, also for years, not “intentional”?

        Please explain the convoluted, er, logic that led you to this conclusion.

    • 0 avatar
      geozinger

      Takata.

      First, faulty seat belts in the 80’s and then faulty airbags in the 00’s-10’s, although some think it was happening as far back as the 90’s.

      Nothing but greed (IMO) and incompetence. NHTSA fined them, the US government charged them and then they went “poof”! Millions of cars with potentially deadly airbags, some being recalled for the second time now.

      Good times…

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