VW Fends Off SEC’s Bondholder Fraud Claim Over Diesel Cheating
Volkswagen AG persuaded a California judge to toss out allegations that it misled bondholders in its diesel cheating scandal, narrowing claims in a lawsuit filed by the Securities Exchange Commission.
U.S. District Judge Charles Breyer rejected the regulator’s
claims involving Volkswagen’s asset-backed securities offerings during its
diesel-cheating activities because those claims were already settled by the
Justice Department.
But the San Francisco judge kept alive the SEC’s allegation
that Volkswagen unjustly enriched itself because it got to pay lower interest
rates by passing the bonds off as lower risk than they actually were. He also
rejected Volkswagen’s request to bar the SEC from requesting an injunction to
block the carmaker’s activities that potentially violate securities law.
Volkswagen was hammered with numerous lawsuits by consumers
and government agencies after it admitted in 2015 that about 11 million diesel
cars worldwide were outfitted with so-called defeat devices that gave false
readings during emissions tests.
“Volkswagen is pleased with the court’s decision to dismiss
all of the SEC’s claims with regard to almost $5 billion in auto asset-backed
securities and to limit the scope of the remaining litigation,” a company
spokesperson said Thursday.
The case is In Re: Volkswagen “Clean Diesel” Marketing,
Sales Practices, and Products Liability Litigation, 15-MD-02672, U.S. District
Court, Northern District of California (San Francisco).
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