LONDON, Sept 24 (Reuters) - European shareholders in Volkswagen are considering claiming damages from the German car maker after it admitted rigging U.S. diesel emissions tests in a scandal that has wiped around $25 billion off its market value.
Investors as well as car owners, who bought VW vehicles on the basis of false emissions information, are examining their rights as the once-venerable company battles a crisis that casts fresh doubt on the integrity of the entire auto industry.
“If we can with some certainty establish that we, as investors, were misled by the company, and that has affected our returns, then I cannot rule out that we would seek compensation from the company,” one of Volkswagen’s top investors in Europe told Reuters, speaking on condition of anonymity because of the sensitivity of the situation.
Volkswagen, which installed software in millions of cars that rigged tests designed to limit noxious car fumes blamed for respiratory diseases and global pollution, faces criminal and regulatory investigations, a hefty fine and public outrage. Its chief executive resigned on Wednesday and its stock has lost around one third of its value since last week.
UK litigator Stewarts Law, which won a group action against Germany’s Commerzbank in 2012 over unpaid banker bonuses and is among those working on a 4 billion pound ($6 billion) investor case against Royal Bank of Scotland, says UK investor claims against VW hinge partly on jurisdiction.
“We have clients who will inevitably be taking a very close look at the possibility of a shareholder claim,” said Clive Zietman, the firm’s head of commercial litigation.
“It is obvious that shareholders in VW in different jurisdictions will be examining their rights and asking themselves whether or not there might be claims in the U.S., Germany and/or in this country (Britain).”
Since last Friday, VW’s ordinary and preference shares have lost roughly 30 percent of their market value. Although only around 30 percent of ordinary shares are freely traded, all preference share investors could potentially make a claim against the company.
The company’s top five preference shareholders have lost around 1.7 billion euros ($2 billion) since last week, while its top ordinary shareholders, dominated by German sports car brand Porsche, the state of Lower Saxony and the Qatar Investment Authority sovereign wealth fund, have lost around 11 billion euros during the saga.
Volkswagen already faces at least 25 consumer class action lawsuits on behalf of scores of car owners in all 50 U.S. states - partly because the company’s cars are so popular among the friends and colleagues of plaintiff lawyers.
Launching collective claims in Britain is tougher than in the United States, where an “opt-out” regime allows claimants with a common interest to be automatically grouped together without every individual having to actively opt in to a lawsuit.
In Britain, opt-out class action lawsuits are being introduced on Oct. 1 for anti-trust cases alone.
If British lawyers want to represent a collective action against a company on other grounds, they have to present an identified group that has actively opted in to proceedings and suffered specified losses over a definitive period of time.
Investor claims for damages need to prove that a company issued an inaccurate prospectus or similar document that is subject to English law and jurisdiction - or that they relied on other financial statements over past years and senior staff were aware of inaccuracies.
The groundwork for such claims is painstaking. The shareholder lawsuit against RBS, which alleges the bank misled investors over a 2008 emergency cash call, has been years in preparation and is only scheduled for trial at the end 2016.
VW said on Tuesday about 11 million of its cars worldwide were fitted with the software that was found to be cheating emissions tests in the United States. German Transport Minister Alexander Dobrindt said on Thursday the company also manipulated emissions tests in Europe.
$1 = 0.6564 pounds Editing by Adrian Croft