Volkswagen Bondholders Reliance Allegations Come Under Scrutiny

This case stems from alleged misstatement made by Volkswagen Group of America Finance ("VWGoAF") in an Offering Memorandum governing the issuance of three sets of bonds. The bonds were offered in private placements with qualified institutional buyers that were exempt from registration under SEC Rule 144A. The plaintiffs generally allege that the Offering Memorandum highlighted Volkswagen's efforts to research and develop emission-reducing technology. Specifically, they allege that the emission-related statements in the Offering Memorandum were misleading because Defendants failed to disclose Volkswagen's use of a defeat device, and that a significant number of Volkswagen's vehicles' on-road emissions greatly exceeded legal limits. These omissions rendered the R&D statements misleading, they assert, because these statements "implied that Volkswagen had already reduced vehicle emissions," which was not true for a significant number of vehicles. Plaintiff contends that the