Litigation funder coordinates shareholder action against Volkswagen

Third-party litigation funder, Bentham Europe, is to fund a shareholder action against Volkswagen AG for breaches of German securities law.

On 18 September, US environmental agencies released the results of investigations they had conducted into the fitting of 'defeat devices' in vehicles manufactured by the German company.

Up to 482,000 vehicles sold by the car manufacturer in the US had been fitted with software that lowered the amount of Nitrous Oxide (NOx) and other pollutants emitted under test conditions.

Once on the road, however, the vehicles' NOx emissions purportedly increased by up to 30 to 40 times.

Responding to the 'emissions scandal', the markets reacted negatively, and some €25bn of Volkswagen's market capitalisation was wiped away. Investors saw the company's share price collapse from approximately €160 to €100 a share.

In the following days it was discovered the scandal was not confined to the US, as the German company had apparently installed a further 11 million devices in vehicles sold across the globe.

As a result, Bentham has confirmed it is in discussions with institutional investors worldwide to fund an action against the embattled vehicle manufacturer, alleging breaches of the securities law over an eight-year period from 2007 to 2015.

In order for the claims to proceed, a sufficient number of shareholders will need to agree to be funded by Bentham Ventures.

The litigation funder said it was the intention to instruct lawyers to commence proceedings as soon as possible.

The action, on behalf of investors who purchased shares on German exchanges, is to be conducted by a leading international law firm, and will seek to establish that shareholders are entitled to compensation for losses caused by breaches of the German Securities Trading Act.

Bentham Europe's chief investment officer, Jeremy Marshall, said shareholders were justifiably concerned the scandal would cause them 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,' he added.

'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.'

John van der Luit-Drummond is deputy editor for Solicitors Journal
john.vanderluit@solicitorsjournal.co.uk | @JvdLD