BlackRock Joins Investors Taking Legal Action Against VW

(Bloomberg) -- BlackRock Inc. the world’s largest money manager, is joining a growing list of investors lining up to sue Volkswagen AG almost a year after the German carmaker admitted to duping emissions tests for as many as 11 million diesel cars.

“On behalf of their investors, a number of BlackRock-managed collective investment schemes are pursuing, alongside other institutional investors, legal action against Volkswagen," BlackRock said Thursday in an e-mailed statement.

The move is "in connection with Volkswagen’s failure to disclose to investors its use of ‘defeat devices’ that manipulated emission tests," it said, declining to elaborate further due to the ongoing legal procedures.

VW has been resilient against the unprecedented hit from the crisis, but multiple new shareholder suits are adding to risks for further financial damage. BlackRock is the world’s largest wealth manager and the second-largest holder of VW’s preferred stock with a 3.35 percent stake after Qatar Holdings LLC, according to Bloomberg data. VW’s preference shares don’t carry voting rights.

VW says it informed the markets at each stage of the process. VW always complied with capital-market rules and the claims are unfounded, company spokesman Eric Felber said in an e-mailed statement.

Shareholders were hard hit as VW’s stock price dropped 35 percent in the two trading days after U.S. regulators disclosed the software that detected when a car was on a test stand and reduced harmful emissions to allow the vehicle to pass inspections.

The carmaker is already facing 380 pending investor suits in Braunschweig, the legal district that includes the company’s headquarters in Wolfsburg. The actions claim the leadership was aware as early as 2014 that U.S. authorities were probing test results and should have disclosed the investigation back then. One lawsuit bundles claims of almost 300 institutional investors and seeks 3.3 billion euros.

The Financial Times earlier reported BlackRock’s plan to join the lawsuit. Bentham Ventures, a subsidiary of American investment firm Elliott Management Corp., is helping to fund the litigation.

Nadine Herrmann, law firm Quinn Emanuel’s lead counsel in the case, said that she intends to file the suit tomorrow on behalf of a group of investors who seek a total of 1.3 billion euros ($1.5 billion). She is also representing plaintiffs in a suit that was filed earlier this year seeking 700 million euros.

BlackRock isn’t the only U.S. firm joining the German lawsuits on behalf of it’s investors. Several Vanguard Group Inc. funds are also pursuing legal action related to the emissions scandal, according to John Woerth, a Vanguard spokesman.

The California State Teachers’ Retirement System is part of Herrmann’s 700 million-euro case that was filed in June.

To contact the reporters on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net, Karin Matussek in Berlin at kmatussek@bloomberg.net.

To contact the editors responsible for this story: Chris Reiter at creiter2@bloomberg.net, Christopher Elser