US SEC sues Volkswagen, its ex-CEO over fraud on investors

The US is suing Volkswagen, accusing the German carmaker of "massive fraud" over the diesel emissions scandal.

The SEC said in its civil complaint on Thursday that from April 2014 to May 2015, VW issued more than $13 billion in bonds and asset-backed securities in U.S. markets at a time when senior executives knew that more than 500,000 U.S. diesel vehicles grossly exceeded legal vehicle emissions limits.

VW “reaped hundreds of millions of dollars in benefit by issuing the securities at more attractive rates for the company,” the SEC said, adding it “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.”

Volkswagen's former chief executive Martin Winterkorn is also being sued.

The company said it would contest the SEC lawsuit vigorously.

When the scandal was uncovered, VW's share price sank nearly 40%.

The firm "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 added.

The suit seeks to bar Winterkorn, who resigned when the scandal became public, from serving as an officer or director of a public US company. He has been charged in the US with conspiring to cover up the emissions cheating scandal.

The suit also seeks to recover "ill-gotten gains" along with civil penalties and interest.

Volkswagen has already agreed to pay more than $25bn in the US over the emissions scandal including criminal and civil fines.

The firm said in a statement the SEC complaint was "legally and factually flawed".

It said the securities in question had been sold "only to sophisticated investors who were not harmed and received all payments of interest and principal in full and on time" and said that Winterkorn had played no part in the sales of those securities.

The carmaker is already defending its actions in court in Germany, where investors are pursuing €9.26bn (£8.2bn) in damages, arguing the company should have come clean earlier about the emissions tests cheating. That case is expected to last until later this year.