The first bondholders' class-action lawsuit against Volkswagen AG and its U.S. subsidiaries was filed Monday in U.S. District Court in San Francisco.
Law firm Labaton Sucharow filed the lawsuit for the $4 billion State-Boston Retirement System on behalf of all bondholders who acquired private debt between May 23, 2014, and Sept. 22, 2015.
Also, one of two institutional investor lawsuits against Volkswagen related to declining share prices as a result of the emissions testing scandal was filed in Germany on Tuesday by Quinn Emanuel Urquhart & Sullivan. Bentham Ventures which is funding the shareholder action, said in a statement that investors, including the $187.4 billion California State Teachers' Retirement System, West Sacramento, lost hundreds of millions of euros.
“As a long-term shareholder, CalSTRS has serious concerns about Volkswagen's internal controls, governance and oversight by the board. This action seeks to recover not only CalSTRS' economic losses to the pension fund, but, ultimately, to implement much-needed corporate governance reforms going forward at Volkswagen,” said Brian Bartow, CalSTRS general counsel and chief compliance officer, in a statement.
The U.S. lawsuit, Boston Retirement System vs. Volkswagen, claims that Volkswagen raised more than $8 billion in the U.S. capital markets by issuing bonds that were traded at “artificially inflated prices” up to 100% over par value. Following a notice of violation from the Environmental Protection Agency in September and related news reports on the company's emission testing improprieties, the bond's values declined and bondholders lost hundreds of millions of dollars, the lawsuit claims.
“The Boston pension fund has decided to open up an avenue of recovery for all public pension funds and other investors in Volkswagen 144-A bonds,” said Labaton Sucharow partner Thomas A. Dubbs in an interview. The law firm is in discussions with a number of pension plan sponsors about their participation in this action, which is not subject to prohibitions against legal action regarding foreign issuers of securities, Mr. Dubbs said.