VW investors seek $11 billion damages over dieselgate
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[September 10, 2018]
By Jan Schwartz
BRAUNSCHWEIG, Germany (Reuters) -
Volkswagen <VOWG_p.DE> went on trial on Monday to face investors seeking
9.2 billion euros ($10.6 billion) in compensation, arguing the carmaker
should have informed shareholders earlier about its diesel emissions
Shareholders representing 1,670 claims are seeking compensation for a
slide in Volkswagen's (VW) share price triggered by the scandal, which
broke in September 2015 and has cost the firm 27.4 billion euros in
penalties and fines so far.
"VW should have told the market that they cheated and generated risk
worth billions," Andreas Tilp, a lawyer for the plaintiffs, told the
Braunschweig higher regional court.
"We believe that VW should have told the market no later than June 2008
that they could not make the technology that they needed in the United
The plaintiffs say VW failed in its duty to inform investors about the
financial impact of the scandal, which became public only after the U.S.
Environmental Protection Agency (EPA) issued a "notice of violation" on
Sept. 18, 2015.
Had investors known about VW's criminal activities, they may have sold
shares earlier or not made purchases, thereby avoiding losses on their
shareholdings, the plaintiffs argue.
VW shares lost up to 37 percent of their value in the days after
authorities exposed illegal levels of pollution emitted from VW diesel
VW has admitted systematic emissions cheating, but denies wrongdoing in
matters of regulatory disclosure.
"This case is mainly about whether Volkswagen complied with its
disclosure obligations to shareholders and the capital markets," VW
lawyer Markus Pfueller told the court. "We are convinced that this is
VW says the EPA's issuance of the notice of violation was not in keeping
with how U.S. authorities had handled similar cases involving other
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Prosecution lawyer Andreas Tilp attends the start of the Model Case
Act trial involving Volkswagen AG and Porsche SE and German Capital
Markets in Braunschweig, Germany September 10, 2018. REUTERS/Fabian
Because other carmakers had reached a settlement for emissions cheating without
an EPA notice of violation, and because VW was in talks about reaching a
settlement, VW's board did not see the need to brief investors before September
2015, the carmaker said in a filing with the Braunschweig court.
VW had already made substantial provisions in late 2015 to cover vehicle
recalls, and because previous fines by U.S. authorities for similar violations
were below $200 million, there was no need to inform investors under German law,
the carmaker said.
So board members at the time, including current chief executive Herbert Diess
and Chairman Hans Dieter Poetsch, did not violate disclosure rules, VW said in
its defense document filed with the court.
However, plaintiffs, including fund management firm Deka, allege managers below
management board level, including divisional heads, knew about deliberate and
systematic emissions cheating.
The company was therefore aware of criminal activity and so investors should
have been warned earlier, the plaintiffs say.
($1 = 0.8648 euros)
(Reporting by Ilona Wissenbach and Jan Schwartz; Writing by Emma Thomasson;
Editing by Mark Potter)
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