SEC sues VW, former CEO Winterkorn for fraud over diesel scandal

The civil complaint concerns statements made to investors during the crisis.

Jake Holmes Reviews Editor
While studying traditional news journalism in college, Jake realized he was smitten by all things automotive and wound up with an internship at Car and Driver. That led to a career writing news, review and feature stories about all things automotive at Automobile Magazine, most recently at Motor1. When he's not driving, fixing or talking about cars, he's most often found on a bicycle.
Jake Holmes
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2013 Volkswagen Passat TDI
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2013 Volkswagen Passat TDI

The complaint centers around VW continuing to sell bonds and securities without informing investors about problems with diesel cars.


The US Securities and Exchange Commission on Thursday announced it is suing  Volkswagen 's former CEO Martin Winterkorn and two of the company's subsidiaries with "defrauding US investors." The SEC alleges that VW misled bond investors even though it knew about the company's emissions-cheating problems, which would come to be known as Dieselgate.

The SEC's complaint, filed in a US District Court in San Francisco on Thursday, centers around the fact that VW issued $13 billion worth of bonds and securities in the US between April 2014 and May 2015 without disclosing any knowledge of so-called cheat devices in diesel cars. 

At the time, the SEC says, "senior executives knew that more than 500,000 vehicles in the United States grossly exceeded legal vehicle emissions limits." By hiding that information, the complaint accuses VW "reaped hundreds of millions of dollars in benefit" by selling those securities for inflated figures.

As well as Volkswagen and Winterkorn, the SEC's filing names Volkswagen Group of America Finance and VW Credit. Along with civil penalties, injunctions and repayment of "ill-gotten gains," the SEC seeks to bar Winterkorn from holding officer or director positions. The long-serving Volkswagen CEO resigned in 2015 in the wake of the diesel scandal coming to light. He was subsequently charged with wire fraud and conspiracy by the Department of Justice.

Volkswagen said in an emailed statement that "The SEC's complaint is legally and factually flawed, and Volkswagen will contest it vigorously."

The statement continued: "The SEC has brought an unprecedented complaint over securities sold only to sophisticated investors who were not harmed and received all payments of interest and principal in full and on time. The SEC does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with U.S. emissions rules when these securities were sold, but simply repeats unproven claims about Volkswagen AG's former CEO, who played no part in the sales. Regrettably, more than two years after Volkswagen entered into landmark, multibillion-dollar settlements in the United States with the Department of Justice, almost every state and nearly 600,000 consumers, the SEC is now piling on to try to extract more from the company."

The issue with diesel engines was first publicized in September 2015. Certain Volkswagen diesel engines produced more pollutants than allowed by emissions laws when driving on normal highways, but "cheated" and produced legal levels of emissions when run on test equipment. In 2017, Volkswagen pleaded guilty to charges relating to the scandal.

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