Daily Management Review

Shareholders to File Suit Against Volkswagen Over Emission Scandal


01/18/2016




Shareholders to File Suit Against Volkswagen Over Emission Scandal
Demanding compensations for the plunge in the share prices due to its emissions test cheating scandal dozens of large shareholders in Volkswagen plan to sue the carmaker in a German court.
 
A case with a regional court in Brunswick would be lodged this week on behalf of 66 institutional investors from the United States and Britain seeking hundreds of millions of euros in damages, law firm Nieding + Barth said on Monday.
 
"On top of that, we collected several thousands of private investors. Therefore we think we are the biggest platform for suits against Volkswagen in Germany," said Klaus Nieding of Nieding + Barth.
 
Since it admitted in September to misleading U.S. regulators about emissions with the help of on-board engine control software, share of Volkswagen have lost almost a third of their value or about 22 billion euros ($24 billion).
 
The so-called capital market model claims, a German legal procedure which uses court rulings won by individual investors as templates to set damages for others that are equally affected in the absence of U.S. style class-action lawsuits would be used by the law firm, sources said.
 
Volkswagen which is facing a legal onslaught on several fronts declined to comment. While the U.S. Justice Department has sued Volkswagen for up to $46 billion under the Clean Air Act, the U.S. owners of vehicles with higher-than-stated emissions are expected to seek billions of dollars in damages.
  
Volkswagen had been aware of its violation of diesel emissions rules before its first statement on the matter in September and should have informed the public earlier, this would be the argument of the law firm Nieding + Barth.
 
Its probe of whether VW breached disclosure rules was so complex it would likely take several more months said Germany's Bafin watchdog on Monday.
 
In November, Bentham Europe, a litigation finance group backed by U.S. hedge fund Elliott Management and Australian-listed IMF Bentham had said that it was in contact with VW's top 200 investors about launching a damages claim in Germany as soon as February.
A law suit on behalf of retail investors was filed in October by German lawyer Andreas Tilp.
 
Meanwhile sever criticism has struck French car maker Renault over the time it took to reveal that French investigators had probed three of its sites on Jan. 7 looking for evidence of cheating in emissions tests.
 
Until a trade union mentioned the news almost as an afterthought in a leaflet about jobs, the raids had remained a secret for nearly a week. The management was quickly proven wrong if they had thought that the visit wasn't worth mentioning.
 
The company lost 5.8 billion euros ($6.4 billion) of market value after shares plunged 23 percent following the news and then finally recovered to close down 10 percent.
 
Renaults later tried to stem the sell-off by saying nothing sinister had been found and issued press releases confirming the raids. There was panic among investors in the wake of the possibility of a Volkswagen Group-type scandal following the revelations that the Economy Ministry's fraud office visited the company's headquarters as well as sites in Guyancourt and Lardy.
 
(Source:www.reuters.com) 






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