05. Sep 17

VW and Daimler in BaFin’s sights – Shareholder damages claims

The car makers Volkswagen (VW) and Daimler could be facing new trouble. Following suspicions of illegal arrangements, Germany’s Federal Financial Supervisory Authority, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), is now investigating whether the car companies violated their information obligations.

The diesel scandal is having repercussions, with the media reporting that it has now brought the financial oversight of the BaFin into the picture. Following suspicions coming to light that VW, Porsche, Audi, BMW and Daimler coordinated on various aspects over many years and thus potentially violated antitrust law, the BaFin is now looking into whether Volkswagen and Daimler violated their information obligations in connection with their supposed voluntary self-disclosure declarations.

We at the commercial law firm GRP Rainer Rechtsanwälte note that inside information that has the potential to substantially influence the price of a given share must be immediately disclosed by companies listed on the stock exchange by way of an ad hoc announcement. If this does not happen, the companies render themselves liable to pay damages to their shareholders. After it became known that there might have been illegal arrangements in place, there was a significant drop in the value of shares in the automakers.

It remains an open question when we can expect the outcome of the BaFin’s investigations. That being said, possible illegal arrangements may prove to be as relevant to stock prices as the supposed voluntary self-disclosure declarations. Shareholders concerned can turn to lawyers who are competent in the field of stock corporation law to preserve their interests and assert potential claims for damages.

VW shareholders have already been hurt by the emissions scandal that came to light in 2015. When the tampering with diesel engines was disclosed, share prices fell considerably. The question also arises here whether Volkswagen complied with its information obligations or rendered itself liable to pay compensation to its shareholders. This is set to be clarified by model case proceedings pursuant to Germany’s Kapitalanleger-Musterverfahrensgesetz (KapMuG) [Capital Investors’ Test Cases Act].

VW shareholders who have yet to file any claims can still join these model case proceedings. It remains possible to sign up until September 8, with the Act requiring that this be done by a lawyer. By signing up, shareholders can benefit from the judgment in the model case proceedings without personal risk. Should it turn out to be the case that VW and/or Daimler breached their information obligations in the context of the alleged car cartel, the car makers could be faced with a new wave of claims.

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