A year on, VW's diesel cheat proves costly

A year ago Volkswagen Group confessed in private to U.S. authorities that it had rigged diesel engines to fool emissions tests. Two weeks later, VW's cheat was made public. The time in between cost some investors dearly.

On Sept. 3 last year VW confessed to the U.S. Environmental Protection Agency that nearly half a million clean diesels it sold in the country over the course of several years were fraudulent, unable to even remotely meet emission limits on the road.

Of course, no one outside of the respective two parties had any clue at the time about this momentous admission of guilt, because Volkswagen kept everyone in the dark: customers, dealers, workers and not the least its owners – the carmaker’s shareholders.

It wasn’t until Sept. 18 that the public was informed and then only because the EPA posted the Notice of Violation it sent to Volkswagen, which the company claimed was “unexpected." VW alleges the previous discussions were going well enough that the EPA notice was a surprise.

Related Blog Post: Corporate Crime and the "Age of the Whistleblower" - How Dieselgate Served as the Perfect Paradox

Do shareholders that bought shares after the guilty admission on Sept. 3 to see their value implode a couple of weeks later have a legitimate case to claim financial damages?

Volkswagen insists that German shareholder lawsuits are without merit, arguing the maximum penalty - $18 billion – had never been applied and that the previous record fine amounted to just $100 million for 1.1 million vehicles. The implication is that the worse it could have realistically expected was $45 million and hence would not have been sufficiently high enough to move the stock price. Instead the real significance came when it revealed in a financial market disclosure on Sept. 22 that 11 million cars were affected.

Even if that was the case, investors clearly didn’t see it that way. The stock cratered at the first opportunity, losing a quarter of its value as investors discounted into the price the reputational damage and the deliberate and intentional nature of the crime.

Moreover, lawyers say the risks to Volkswagen could be far greater. A court ruling coincidentally stemming from a case in the auto industry could completely undermine Volkswagen’s argument and open up the risk of claims reaching much further back in time than just September 3. read more »

2015 Hyundai Genesis Recalled for Electrical System Problem

Hyundai Motor America is recalling 3,031 2015 Hyundai Genesis sedans to fix an electrical problem, according to the National Highway Traffic Safety Administration.

"The affected vehicles are equipped with a 7-inch TFT-LCD instrument cluster that may display an incorrect vehicle speed or may illuminate all of the warning lights or not illuminate a warning light that needs to be lit," the NHTSA said in its recall summary. "If the instrument cluster displays the vehicle speed or illuminates the warning lights incorrectly, there would be an increased risk of a crash."

No accidents or injuries are linked to the recall, Hyundai told federal safety regulators.

The affected Genesis sedans were built from February 1, 2015, through May 20, 2015.

Hyundai dealers will update the instrument-cluster software. The recall is expected to begin on September 30. Owners can contact Hyundai customer service at 1-800-633-5151.

Edmunds says: Owners of these vehicles should be ready to schedule a service appointment with their dealer once they receive their official recall notice. read more »