VW’s US finance unit to pay $48.75 million to resolve SEC diesel case

By David Shepardson

WASHINGTON (Reuters) -Volkswagen Group of America’s wholly owned finance unit has agreed to pay $48.75 million to resolve a government lawsuit that accused the German automaker and its former CEO of defrauding investors in U.S. bond offerings.

The Securities and Exchange Commission filed a civil lawsuit in March 2019 accusing Volkswagen AG, two subsidiaries and former chief executive Martin Winterkorn of defrauding investors. The SEC is dismissing claims against Volkswagen AG and Winterkorn.

The settlement with Volkswagen Group of America Finance filed Friday marks the last significant legal action related to the diesel emissions scandal in the United States.

This cost the German automaker more than $20 billion in fines, penalties and settlements after it admitted in 2015 it had cheated emissions tests by installing “defeat devices” and sophisticated software in nearly 11 million vehicles worldwide.

Volkswagen in 2017 pleaded guilty to criminal conduct as part of a $4.3 billion Justice Department settlement and offered to buy back about 500,000 polluting U.S. vehicles.

A Volkswagen spokesperson said its finance unit was “pleased to have reached an agreement with the SEC”. The settlement requires approval by a U.S. judge in San Francisco. The VW finance unit did not admit or deny the SEC allegations.

The SEC, which did not immediately comment Friday, had sought about $350 million plus interest.

The SEC complaint said from April 2014 to May 2015, Volkswagen issued more than $13 billion in bonds and asset-backed securities in U.S. markets when senior executives knew more than 500,000 U.S. vehicles dramatically exceeded legal vehicle emissions limits.

VW could have faced another $350 million if civil penalties had been imposed.

The settlement includes $34.35 million and interest of $14.4 million that will be distributed by the SEC to investors in the 2014 and 2015 bond offerings.

(Reporting by David Shepardson; Editing by Chizu Nomiyama and Alexander Smith)