CalSTRS To Sue Volkswagen

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CalSTRS said over the weekend that the fund is joining a German securities lawsuit against automaker Volkswagen.

CalSTRS has been a long-term shareholder of the company, whose shares have plummeted since a 2015 scandal that saw the automaker admit to deceiving emissions tests.

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Since the September 2015 revelation of Volkswagen’s fraudulent activities, illegal and intentional wrongdoing to manipulate emissions testing, VW’s share price has dropped significantly. The litigation is currently in the planning process, with additional plaintiffs to be announced in the near future.

“Volkswagen’s actions are particularly heinous, since the company marketed itself as a forward thinking steward of the environment,” says CalSTRS Chief Executive Officer Jack Ehnes. “Its deceitful and hypocritical actions ultimately caused great harm to the atmosphere and the emissions cheating scandal has badly hurt the company’s value.”

Ehnes continued, “As an actively involved, long-term shareholder, CalSTRS places utmost importance on our fiduciary duty to our members to attempt to recover losses due to such wrongful conduct, while also communicating a clear message to VW, as well as the entire automotive industry, that we will not tolerate these illegal actions.”

According to a CalSTRS statement, German securities litigation is unlike United States securities class actions because shareholders in German companies are not entitled to a pro-rata share of recovery unless they affirmatively join a case, as CalSTRS is doing. A majority of CalSTRS shares in Volkswagen AG, valued at $52 million (353,988 shares as of December 31, 2015) in common and preferred stock, were purchased on foreign exchanges.

CalPERS is also planning to sue Volkswagen, but it will be a separate action.

 

Photo by Long Road Photography (formerly Aff) via Flickr CC License

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