In the U.S., Volkswagen has until June 28 to reach a settlement with regulators and car owners for its diesel emission cheating scandal.
The public pension fund for Boston municipal employees, Boston Retirement System has filed the first bondholders proposed class action suit against Volkswagen AG in relation to its diesel emission scandal, as per Labaton Sucharow LLP, a law firm.
Apart from Volkswagen AG, the lawsuit has also named Volkswagen Group of America Finance Inc and Volkswagen Group of America Inc as defendants. The suit claims that these companies have made “false and misleading statements and omissions” which have caused VW’s bonds to trade at “artificially inflated prices…, only to decline after the emissions scandal went public,”, said a statement from the law firm.
The lawsuit has been filed in the U.S. District Court for the Northern District of California. It seeks to recover damages for bondholders who purchased VW’s bonds between the period of May 23, 2014, to September 22, 2015. As per a statement from the law firm, VW’s bonds in this period has raised more than $8 billion.
“At the same time that Volkswagen was deceiving U.S. investors and regulators with its rigged emissions systems, it was raising billions of dollars from investors in the U.S. capital markets,” reads a statement from Thomas A. Dubbs, a partner at Labaton Sucharow.
VW did not immediately respond to a requests for comments.
The proposed class action suit claims that by failing to disclose the fact that VW had used a device in some of its diesel cars, which allowed it to temporarily reduce compliance to emission norms, which in turn increased its sales, Volkswagen has misled bondholders.
In the wake of its diesel emission crisis, Volkswagen has faced a slew of litigation in not only in the U.S but also in Germany by shareholders and car owners. It has set aside $18 billion to cover the cost of refitting the effected vehicles as well as for settling impending lawsuits, after its admission to U.S. authorities that it had used a cheating device during U.S. diesel emissions tests.
Volkswagen has until June 28 to reach a final settlement with U.S. regulators and 500,000 owners of its vehicles.
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