SEC justifies its “lateness” in Volkswagen’s pollution testing scandal

On Monday, in a federal court filing, the US Securities and Exchange Commission (SEC) submitted its response, justifying the delay in suing  Volkswagen and its former chief executive, Martin Winterkorn, for cheating its bond investors. Two years ago, after US Justice Department’s criminal probe, the German auto maker pleaded guilty to three crimes and was charged $4.3 billion as fine.

The SEC filed a case accusing the company and Winterkorn of not informing its bond investors that over 500,000 vehicles in America exceeded their legal emissions limit during that period. Winterkorn got to know about an emission-cheating device from two engineers in November 2007. Volkswagen received $13 billion from sale in bonds in the US from April 2014 to May 2015. The company’s cost of funding would have been much higher if it would have informed its investors about the legal risk of installing pollution devices with higher emissions limit than permitted legally.

In May, US District Judge, Charles Breyer, questioned the SEC the reason for delay in suing the company, that too when the automaker was found guilty in a global scandal related to vehicle emission, two years ago.

Breyer said, “My basic question is what took you so long.” He added that he was “totally mystified” as to why the regulator waited until 2019.

The SEC claimed that it began its investigation in September 2015, but long delays were caused on VW’s side in ‘producing documents and other information, uncooperative witnesses who were reluctant or altogether refused to speak to the staff and efforts (with mixed success) to navigate cumbersome procedures for collecting evidence located abroad’.

 

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