CalSTRS to Engage in German Securities Litigation Against Volkswagen AG
WEST SACRAMENTO, Calif. – The California State Teachers’ Retirement System today announced plans to participate in a German securities litigation suit against Volkswagen AG, citing the automaker’s admission that it deliberately installed software that misrepresented air quality and emissions information on millions of so-called “clean diesel” vehicles.
This securities litigation against Volkswagen directly aligns with CalSTRS’ fiduciary goal of recovering losses that amount to millions of dollars caused by corporate wrongdoing. Since the September 2015 revelation of Volkswagen’s fraudulent activities, illegal and intentional wrongdoing to manipulate emissions testing, VW’s share price has dropped significantly. The litigation is currently in the planning process, with additional plaintiffs to be announced in the near future.
“Volkswagen’s actions are particularly heinous, since the company marketed itself as a forward thinking steward of the environment,” said CalSTRS Chief Executive Officer Jack Ehnes. “Its deceitful and hypocritical actions ultimately caused great harm to the atmosphere and the emissions cheating scandal has badly hurt the company’s value.”
Mr. Ehnes continued, “As an actively involved, long-term shareholder, CalSTRS places utmost importance on our fiduciary duty to our members to attempt to recover losses due to such wrongful conduct, while also communicating a clear message to VW, as well as the entire automotive industry, that we will not tolerate these illegal actions.”
German securities litigation is unlike United States securities class actions because shareholders in German companies are not entitled to a pro-rata share of recovery unless they affirmatively join a case, as CalSTRS is doing. A majority of CalSTRS shares in Volkswagen AG, valued at $52 million (353,988 shares as of December 31, 2015) in common and preferred stock, were purchased on foreign exchanges.
CalSTRS retained the services of the international law firm, Quinn Emanuel, and the foreign litigation finance group, Bentham Europe, to pursue the legal action in German courts.
The California State Teachers’ Retirement System, with a portfolio valued at $179.4 billion as of January 31, 2016, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. CalSTRS serves California’s 896,000 public school educators and their families from the state’s 1,700 school districts, county offices of education and community college districts.