Volkswagen and its former chief executive officer were sued by the U.S. Securities and Exchange Commission over claims they failed to disclose to investors that diesel vehicles violated emission standards, the latest twist in a software cheating scandal that has already cost the company more than US$30 billion.

The German automaker sold billions of dollars of corporate bonds and asset-backed securities in the U.S. from 2010 to 2015 while concealing its emissions-cheating scheme, according to the complaint filed by the regulator late Thursday in San Francisco federal court.

The case, also filed against ex-CEO Martin Winterkorn, could give fresh impetus to similar efforts for redress from European investors.

“The investors did not know that VW was lying to consumers to fool them into buying its ‘clean diesel’ cars and lying to government authorities in order to sell cars in the U.S. that did not comply with U.S. emission standards,” the SEC alleged.

VW said the SEC complaint is “legally and factually flawed” and the company will “contest it vigorously.” It accused the Commission of “piling on to try to extract more from the company” more than two years after settlements with the Justice Department.

“The SEC has brought an unprecedented complaint over securities sold only to sophisticated investors who were not harmed and received all payments of interest and principal in full and on time,” spokesman Christopher Hauss said in an emailed statement.

“The SEC does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with U.S. emissions rules when these securities were sold, but simply repeats unproven claims about Volkswagen’s former CEO, who played no part in the sales,” he added.

Allegations that VW wrongfully withheld information about the emission software used in its diesel cars have loomed over the company since the scandal first broke in 2015. The crisis involved as many as 11 million diesel cars worldwide and has cost the Wolfsburg-based company about 28 billion euros (US$32 billion) so far.

A court in the German city of Braunschweig is currently assessing a group action covering suits brought by thousands of investors with claims totaling more than 9 billion euros. It has scheduled the next hearing in the case for March 25.

Source: Driving

March 15, 2019