Institutional investors are suing Volkswagen for 3.25 billion euros ($4.8 billion Cdn) in damages over the company's handling of its emissions scandal, which has so far seen the share price fall by about a third.
Attorney Andreas Tilp said Tuesday that the suit in the German regional court in Braunschweig was joined by investors from 14 countries, including the U.S., Australia, Germany, Canada, the Netherlands, and the U.K. Among the plaintiffs is CalPERS, the giant pension fund for government employees in California.
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Volkswagen had no immediate comment on the suit, but has said that shareholder lawsuits in Germany are without merit.
Tilp has already filed a suit on behalf of individual investors, claiming Volkswagen didn't inform investors in a timely way about the troubles with diesel cars.
Did not inform investors
Marc Schiefer, an attorney with Tilp's firm, said Volkswagen did not live up to legal requirements that it inform investors of troubles with diesel engines between 2008 and 2015. "They should have told the markets that something was not working with their diesel technology," Schiefer said.
German securities law requires that companies tell investors when they have information that could substantially affect the share price. If the negative information had been made public, investors could have either decided not to buy the stock or would have been able to purchase it at a lower price.
Volkswagen is being sued by U.S. authorities over 600,000 cars equipped with software that defeated diesel emissions tests. The company has apologized and said it will fix the cars. Some 11 million cars worldwide are affected.
Shares took a hit
The company's preference shares have fallen 33 per cent since Sept. 17, the day before the scandal became public, and were trading at 112.80 euros per share Tuesday.
So far, Volkswagen has set aside 6.7 billion euros ($9.9 billion) to cover the cost of recalling cars, but analysts say the final bill from lawsuits and lost sales could be several times higher.
The company potentially faces more than $20 billion US in fines from state and federal regulators, on top of hundreds of class-action lawsuits filed on behalf of angry vehicle owners. The Justice Department is also conducting a criminal investigation.
Volkswagen on March 2 issued a statement saying that they had met their disclosure obligations under German law. That statement said management expected the diesel problem would affect only a manageable number of vehicles and that any fines would be in the low two- or three-digit millions of dollars. The company only found out otherwise, it said, on Sept. 18, when the U.S. Environmental Protection Agency announced it had found the engines to be in violation. The company said it then "promptly" announced the problem on Sept. 22.