A securities fraud complaint has been filed against Volkswagen over the fixing of its cars' US emissions tests.
Shareholder rights law firm Robbins Arroyo filed a securities fraud class action complaint at the US District Court for the Eastern District of Virginia alleging that officers and directors of Volkswagen violated the Securities Exchange Act of 1934 between November 19, 2010 and September 21, 2015, by making materially false and misleading statements about Volkswagen's operations and its financial condition.
According to the complaint, Volkswagen officials failed to disclose that the company had utilised a "defeat device" in its diesel cars that allowed the cars to temporarily reduce emissions and achieve higher fuel economy during testing. The cars also discharged dramatically higher emissions when testing was not being conducted. The complaint further alleges that the use of this device allowed Volkswagen to market its diesel vehicles to environmentally conscious customers, increasing its sale of diesel cars in the US and abroad, along with its profitability.
As a result, Volkswagen ordinary and preferred American Depositary receipts traded artificially inflated prices reaching highs of $54.84 and $56.55 respectively,
When news broke of the Environmental Protection Agency’s Notice of Violation against Volkswagen, ADR prices fell by over a third resulting in hundreds of millions of dollars in losses to Volkswagen investors according to the law firm.