U.S. District Judge Charles Breyer says that Volkswagen AG (VW) and ex-CEO Martin Winterkorn must face an investor lawsuit related to its diesel emissions cheating scandal. Breyer turned down VW brand chief Herbert Diess’s request that the proposed securities fraud cases be dismissed from a California court. The company is still under criminal investigation by the US Justice Department.
The plaintiffs are primarily municipal pension funds that invested in Vokswagen via American Depositary Receipts. An ADR is a type of equity ownership in a non-US company that represents the company’s foreign shares that are kept on deposit by a bank in the home country of that company.
Volkswagen believes that the investor complaints at issue should be heard in Germany. Judge Breyer, however, ruled that since the US is invested in protecting investors from this country against securities fraud, the complaints should proceed in the US. Investors believe that the German automaker and its executives misled the public when it assured them that its diesel vehicles fulfilled all emission standards while downplaying the liabilities that would result because the company was not, in fact, complying with these standards.