By WSJ Staff
The U.S. Securities and Exchange Commission said it charged Volkswagen AG, two of its units, and former Chief Executive Martin Winterkorn with defrauding U.S. bond investors.
In a news release issued late Thursday, the SEC said the German auto maker raised billions of dollars through the corporate bond and fixed-income markets, while making a series of deceptive claims about the environmental impact of the company's "clean diesel" fleet.
The SEC said it alleges in its complaint that from April 2014 to May 2015 VW issued more than $13 billion in bonds and asset-backed securities in the U.S. markets at a time when senior executives knew that more than 500,000 vehicles in the U.S. grossly exceeded legal vehicle-emissions limits, exposing the company to massive financial and reputational harm.
The SEC's complaint alleges that Volkswagen made false and misleading statements to investors and underwriters about vehicle quality, environmental compliance, and VW's financial standing, the agency said.
The complaint alleges that VW, by concealing the emissions scheme, reaped hundreds of millions of dollars in benefits by issuing the securities at more-attractive rates for the company, the agency said.
The SEC said it charged VW, Mr. Winterkorn and subsidiaries Volkswagen Group of America Finance LLC and VW Credit Inc. with violating the antifraud provisions of the federal securities laws.
The SEC complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties, the SEC said. The complaint also seeks an officer and director bar against Mr. Winterkorn, the SEC said.
"Issuers availing themselves of American capital markets must provide investors with accurate and complete information," said Stephanie Avakian, co-director of the SEC's division of enforcement in the news release. "As we allege, Volkswagen hid its decadelong emissions scheme while it was selling billions of dollars of its bonds to investors at inflated prices."
The SEC's complaint was filed in the U.S. District Court for the Northern District of California, the SEC said.