Driving Past Dispute: Volkswagen Finance Unit Reportedly Resolves SEC Lawsuit

Zinger Key Points
  • Volkswagen's finance unit reportedly agrees to $48.75 million SEC settlement.
  • Settlement concludes major legal action from diesel emissions scandal.

Volkswagen AG VWAGY Volkswagen Group of America’s wholly owned finance unit has reportedly reached a $48.75 million settlement to resolve allegations of defrauding investors in U.S. bond offerings.

The Securities and Exchange Commission filed a civil lawsuit in March 2019, accusing Volkswagen AG, two subsidiaries, and former CEO Martin Winterkorn of investor fraud.

The SEC dismissed claims against Volkswagen AG and Winterkorn, according to a report from Reuters.

The settlement represents the final major legal action stemming from the diesel emissions scandal in the U.S., as per the report.

This scandal resulted in over $20 billion in fines, penalties, and settlements after Volkswagen’s admission in 2015 of cheating emissions tests. In 2017, Volkswagen pleaded guilty to criminal conduct, agreeing to settle with the Justice Department.

The report cited a spokesperson for Volkswagen who expressed satisfaction with the agreement, emphasizing the finance unit’s contentment with resolving the SEC allegations. However, the settlement remains subject to approval by a U.S. judge in San Francisco.

The report noted that the SEC had initially sought approximately $350 million in damages plus interest.

The commission’s complaint highlighted Volkswagen’s issuance of over $13 billion in bonds and asset-backed securities in U.S. markets from April 2014 to May 2015, during which senior executives were aware of significant emissions violations in over 500,000 U.S. vehicles.

Had civil penalties been imposed, Volkswagen could have faced an additional $350 million in liabilities.

The report further noted that the settlement includes $34.35 million in restitution and $14.4 million in interest, to be distributed by the SEC to investors involved in the 2014 and 2015 bond offerings.

Also Read: Tesla Triumphs As India Eases EV Taxes, Rivalry With BYD And VinFast Heats Up: Report

Price Action: VWAGY shares are trading higher by 1.04% at $14.33 on the last check Friday.

Photo by Ivan Radic via Flickr

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