SEC may charge Volkswagen over diesel scandal

Patrick T. Fallon | Bloomberg | Getty Images

Hoses connect laboratory emission testing equipment to a red 2016 Volkswagen AG Golf TDI inside the California Air Resources Board Haagen-Smit Laboratory in El Monte, California.

The Securities and Exchange Commission may take enforcement action against Volkswagen over the German automaker’s involvement in the “dieselgate” emissions scandal, according to VW’s annual report.

The automaker said the agency is ‘piling on’ and that the agency’s complaint is without merit.

The agency told Volkswagen it opened in January 2017 a formal investigation, which is ongoing and may result in an enforcement action, according to the annual report. The SEC can issue fines and other civil penalties for violations of securities law.

The SEC has asked Volkswagen for information on potential securities law violations over certain investments the company may have sold to investors. The agency is looking for evidence determining whether the automaker failed to disclose information about vehicles that didn’t comply with U.S. emission standards when it issued certain securities to investors.

The SEC declined to comment to CNBC. Volkswagen said the complaint is “legally and factually flawed and that the automaker will “contest it vigorously.”

One of the world’s largest carmakers, Volkswagen was rocked by reports first surfacing in 2015 that it had been caught cheating on emissions tests in the United States. The subsequent scandal cost Volkswagen billions of dollars to settle and forced the automakers to recall millions of vehicles.

Here is Volkswagen’s full statement:

“The SEC’s complaint is legally and factually flawed, and Volkswagen will contest it vigorously,” the automaker said to CNBC. “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.”