Auto Manufacturer Settles SEC Claims of Greenwashing

In the U.S. District Court of the Northern District of California, an automobile manufacturer settled SEC charges for making misleading statements in connection with corporate bond offerings in 2014 and 2015. (See related coverage.)

The SEC had charged the company, two of its subsidiaries and its former CEO (collectively, the "Defendants") with defrauding U.S. investors by making a series of deceptive claims about the company’s "clean diesel" fleet while issuing billions of dollars' worth of corporate bonds and other securities. The SEC had alleged that from April 2014 to May 2015, the Defendants issued more than $8 billion in bonds in the U.S. markets at a time when senior company executives knew that more than 500,000 of their vehicles in the United States grossly exceeded legal vehicle emissions limits. The SEC alleged that the Defendants made false and misleading statements to investors and underwriters about vehicle quality, environmental compliance and the company’s financial standing.

The company, without admitting or denying the SEC’s allegations, consented to the entry of a final judgment permanently enjoining it from violations of the antifraud provisions of Securities Act Section 17(a) ("Fraudulent interstate transactions"), Exchange Act Section 10(b) ("Regulation of the Use of manipulative and deceptive devices") and SEA Rule 10b-5 ("Employment of manipulative and deceptive devices") thereunder. The final judgment ordered the Defendant to pay $34.35 million in disgorgement and $14.4 million in prejudgment interest. Following the entry of the final judgment, the SEC dismissed its outstanding claims against the Defendant’s ultimate parent company and former CEO.