Volkswagen is being sued again. Boston Retirement System alleges misleading statements about the diesel emissions scandal hurt bondholders.
Volkswagen AG executives keep trying to climb out of the legal hole the company found itself in the wake of the emission-cheating scandal, but the lawsuits to continue to pile up.
In the wake of news that German authorities are investigating former CEO Martin Winterkorn for failing to disclose make public information about the cheating scandal as soon as he learned of it, VW now faces a lawsuit by bondholders in the U.S.
Boston Retirement System, the public pension fund for Boston municipal employees, filed the first bondholders proposed class action against Volkswagen AG related to the company’s diesel emissions scandal, law firm Labaton Sucharow LLP said.
The lawsuit, which also names as defendants Volkswagen Group of America Inc. and Volkswagen Group of America Finance Inc., claims that “false and misleading statements and omissions” by Volkswagen caused its bonds to trade at “artificially inflated prices …, only to decline after the emissions scandal went public,” the law firm said in a statement.
The lawsuit, filed in U.S. District Court for the Northern District of California, seeks to recover damages for bondholders who purchased bonds between May 23, 2014, and Sept. 22, 2015, in sales that raised more than $8 billion for Volkswagen, the law firm said.
(Former VW CEO Winterkorn under criminal investigation. For more, Click Here.)
Misleading statements and omissions regarding the diesel-emissions scandal are the basis for the latest suit against VW.
“At the same time that Volkswagen was deceiving U.S. investors and regulators with its rigged emissions systems, it was raising billions of dollars from investors in the U.S. capital markets,” Thomas A. Dubbs, a partner with Labaton Sucharow, said in the statement.
Volkswagen did not immediately respond to a request for comment but U.S. courts have been customarily deferred to the interests of bondholders.
(Click Here for details about the $18.2 billion hit VW is taking for its diesel deception.)
The German automaker misled bondholders by failing to disclose that it had used a device in some of its diesel cars that allowed them to temporarily reduce emissions during testing, which increased sales, the complaint, filed in the U.S. District Court of Northern California, claims.
The legal action by bondholders is only the latest in a series of lawsuits brought against the company in Germany and in the U.S by car owners and shareholders, has set aside $18 billion to cover the cost of vehicle refits and a settlement with U.S. authorities after admitting in September to cheating U.S. diesel emissions tests.
(VW upping investment in U.S. after diesel scandal. Click Here for the story.)
In the United States, Volkswagen is facing a June 28 for reaching a final diesel emissions settlement with government regulators and owners of nearly 500,000 2.0-liter vehicles. Without a voluntary settlement, the company could face punishing regulatory penalties both from the U.S. Environmental Protection Agency and the State of California.