CalSTRS will join a proposed German securities lawsuit against Volkswagen AG over the automaker's admission that it deliberately installed software that misrepresented air quality and emissions levels on millions of vehicles it had labeled clean diesel, spokesman Ricardo Duran said in an interview.
The planned suit is being financed by litigation funding group Bentham Europe Ltd. The group announced in October that it was “coordinating a German shareholder action against Volkswagen AG.”
Numerous lawsuits have been filed around the world, including in the U.S., against Volkswagen. However, Jack Ehnes, CEO of the $179.4 billion West Sacramento-based California State Teachers' Retirement System, said in a news release that unlike U.S. securities class-action suits, stockholders in German companies are not entitled to a pro-rata share of recovery unless they affirmatively join a case.
Mr. Duran said CalSTRS will be working with international law firm Quinn Emanuel Urquhart & Sullivan in filing the lawsuit.
Mr. Ehnes said in a news release that additional plaintiffs will be announced in the near future.
One source with knowledge of the situation said CalSTRS' participation in the planned litigation is being dangled in front of other institutional investors to get them to join the lawsuit.
Mr. Ehnes said in the news release that the securities litigation against Volkswagen directly aligns with CalSTRS' fiduciary goal of recovering losses that amount to millions of dollars caused by corporate wrongdoing.
“Volkswagen's actions are particularly heinous, since the company marketed itself as a forward-thinking steward of the environment,” Mr. Ehnes said. “It's deceitful and hypocritical actions ultimately caused great harm to the atmosphere, and the emissions cheating scandal has badly hurt the company's value.”
CalSTRS shares in Volkswagen are valued at $52 million (353,988 shares as of Dec. 31) and the majority are in common and preferred stock purchased on foreign exchanges, Mr. Ehnes said.
Mr. Duran said CalSTRS estimates it lost more than €13 million ($14.5 million) from the price drops in Volkswagen stock following company disclosures in September that it faked emissions testing results.
