VW CEO Matthias Mueller may become part of group of executives investigated by German authorities.

The thicket of legal action around Volkswagen continues to grow, creating new problems for the company’s top management, which is eager to quiet the discussions about the emission scandal that has damaged the company’s image and undercut the company’s sales in the United States at a critical juncture.

Germany’s financial watchdog has called on prosecutors to investigate Volkswagen’s entire former management board over the time it took to disclose the carmaker’s emissions test cheating, according to press reports from Germany

The complaint filed with prosecutors in Braunschweig, Germany, by Bafin, the German agency responsible for policing corporate misfeasance, is a blow for VW Chairman Hans Dieter Poetsch and CEO Matthias Mueller, who were both members of the management board – as finance chief and head of the Porsche brand respectively – when the emissions scandal erupted.

The scandal also led to imposition of tougher emission testing standards across Europe.

The prosecutors in Braunschweig said this week they were investigating former VW CEO Martin Winterkorn. Germany’s financial watchdog has called on prosecutors to investigate Volkswagen’s entire former management board, including Poetsch and Mueller, over the time it took to disclose the carmaker’s emissions test cheating, a person familiar with the matter told Reuters.

Volkswagen also confirmed that prosecutors were probing VW brand chief Herbert Diess as part of an investigation into whether the company violated disclosure and market manipulation rules.

VW Chairman Hans Dieter Poetsch blames a small group for the diesel emissions cheating.

(VW facing new lawsuit from bondholders. For more, Click Here.)

The question is whether or not VW managers were negligent by taking too long to disclose the carmaker’s involvement in an emissions test cheating scandal which violated clean air rules.

Bafin now apparently suspects the entire management board in place last year could be held collectively responsible for how the scandal was communicated to markets.

Klaus Ziehe, a spokesman for the Braunschweig prosecutor’s office, declined to provide details on Bafin’s complaint, but said the office’s investigations could be widened or narrowed. However, Ferdinand Piech, VW’s long-time chairman, had left the board several months prior to the disclosure of the emission scandal.

Bafin’s complaint comes on the eve of VW’s annual shareholder meeting, where the company was already bracing for a rough ride from investors who want to know who was responsible for the emissions test cheating.

Also on Tuesday, law firm Quinn Emanuel filed a lawsuit in Germany against VW on behalf of institutional funds over the plunge in its share price due to the scandal.

(Click Here for details about the $18.2 billion hit VW is taking for its diesel deception.)

Earlier this week, bondholders in the U.S. also filed a lawsuit in California. The suit claims VW failed to disclose information about the cheating scandal that was in the company’s possession prior to the sale of the bonds to investors.

Europe’s biggest car maker disclosed this past September that it had cheated on U.S. diesel emissions tests, forcing out long-standing CEO Winterkorn, hammering its shares and tarnishing its reputation.

The company has also set aside $18 billion to cover the cost of vehicle refits and a settlement with U.S. authorities, but some analysts think the bill could be substantially more.

The financial regulators in Germany are focusing on the period prior to the September disclosure when VW and U.S. regulators were in discussion over the carmaker’s emissions tests, the cheating was announced to financial markets on Sept. 18, after VW’s lawyers and lobbyists failed to persuade the U.S. Environmental Protection Agency not to file charges against the company.

VW acknowledged in its annual report that it had not grasped the potential impact of the issue, saying the management board at the time thought the costs would be similar to previous cases.

The decision by U.S. authorities to issue a notice of violation of environmental law against VW on Sept. 18, came as a surprise to the company, the annual report said, adding the “facts and financial consequences then presented the situation in a completely different light.”

(To see more about former VW CEO Winterkorn’s criminal investigation, Click Here.)

The person familiar with the matter, according to Reuters and the German-language press, said Bafin believed the entire former management board should be held collectively responsible for how the scandal was communicated to markets.