U.S. judge narrows SEC emissions lawsuit against Volkswagen

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A U.S. judge on Thursday turned down portions of a U.S. Securities and Exchange Commission (SEC) lawsuit alleging Volkswagen AG of defrauding American investors in association with the automaker’s diesel emissions scandal.

U.S. District Judge Charles Breyer in San Francisco granted VW’s motion to reject claims it misled investors when releasing more than $13 billion of bonds and asset-based securities in 2014 and 2015.

The judge declined as premature VW’s request to block the SEC from getting injunctive relief and to disgorge profits.

He also rejected former VW Chief Executive Martin Winterkorn’s request to decline related SEC claims against him.

Volkswagen said it was happy with the decision. “As this case proceeds, we intend to demonstrate that the SEC’s allegations are without merit,” the automaker said.

The case emerged after VW was in 2015 admitted using illegal software to evade excessive pollution levels in its diesel cars, resulting in series of prosecutions and lawsuits.

That discovery caused a global backlash that has cost the German automaker more than 30 billion euros ($35.1 billion), including $4.3 billion in U.S. criminal and civil fines in 2017.

VW has admitted to secretly setting up the software in approximately 500,000 U.S. vehicles.

But regulators and investors have said it should have warned earlier about the breadth of the scandal. The automaker has said it underestimated the financial fallout.

Breyer agreed with VW that SEC claims based the ABS offerings must be declined because the Department of Justice had already settled them in association with the 2017 settlement.

He also rejected some claims that the automaker misled bondholders in financial statements and the risk of recalls.

Breyer said the SEC sufficiently argued Winterkorn knew the automaker was using false financial statements and rejected his argument that some claims be turned because he operated VW from Germany.

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