Third-party funder Bentham Europe is set to back a shareholder in Germany against Volkswagen (VW), as the fall-out from the use of ‘defeat device’ software to beat emissions testing continues to grow.
Since the disclosures by the car company, its market capitalisation has fallen by some €25bn and investors have seen the share price collapse from approximately €160 to €100.
Bentham said it is now “in discussions with institutional investors worldwide to fund a shareholder action”, alleging breaches of German securities law over in the eight years to September 2015.
The company said the actions will seek to establish that shareholders are entitled to compensation for losses caused by VW’s alleged breaches of the German Securities Trading Act, based upon “the company’s apparent failure to inform the market, over a long period of time, about its suspected practice of installing and using ‘defeat device’ software in a very significant number of vehicles it manufactured and sold into the United States and other world car markets”.
VW’s alleged conduct has resulted in worldwide investigations, including criminal investigations in Germany and the US, the resignation of senior company executives, and the prospect of a large scale and worldwide vehicle recall.
Bentham is now trying to get in contact with all current and former shareholders who acquired at least 10,000 VW shares on a German or European exchange between 1 January 2007 to 18 September 2015, and who had not sold all of them prior to the market opening on 21 September 2015.
Jeremy Marshall, Bentham Europe’s chief investment officer, said: “Volkswagen shareholders are justifiably concerned that Volkswagen has appeared to have allowed this practice to continue for what may have been a number of years, in the assumed knowledge that its disclosure to the market would be likely to cause them and their shareholders significant financial harm.
“We expect a legal claim to reveal the true extent of the problem and allow shareholders to seek compensation for the undoubted harm that has been suffered. Shareholders – who saw billions wiped off the value of Volkswagen in two days – deserve more than just an apology for what appears to be long-running and concerted cheating of the system.”
In order for the claims to proceed, a “sufficient number” of shareholders will need to agree to be funded by Bentham Ventures.
Meanwhile, Leigh Day, the London and Manchester group action specialist investigating potential legal claims on behalf of VW vehicle owners, said it has written to the company’s new CEO to demand that the company agree to a full refund of the premium consumers have paid for their ‘clean’ diesel cars and compensation for other related losses.
VW has not admitted to falsifying emissions data in the EU, although 1.2m vehicles are being recalled.
The letter from partner Bozena Michalowska-Howells said: “However, if it is found that defeat devices have been used in our clients’ vehicles, this undoubtedly amounts to a misrepresentation and a breach of contract…
“Whilst we welcome the news that repairs will be undertaken to upgrade the affected cars to comply with EU nitrogen dioxide emission standards, such repairs may result in reduced fuel efficiency and increased CO2 emissions which in turn may impact upon the vehicle excise duty payable and other associated costs. Our clients are also very concerned about the impact of the use of defeat devices on the re-sale value of their cars.”
Ms Michalowska-Howells called on VW to enter into negotiations to set up a settlement scheme.