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The Securities and Exchange Commission said late Thursday that Volkswagen AG (VLKAY) continued to market billions in bonds and other financial products to investors even as it knew the escalating 2015 'dieselgate' scandal would mean it was selling cars that violated U.S. environmental law.

Volkswagen called the suit, which targets former CEO Martin Winterkorn and other senior executives and alleges the carmaker sold Volkswagen sold $13 billion in bonds and asset-backed securities while withholding information on emissions, "legally and structurally flawed", vowing to contest the allegations "vigorously". The SEC also said Volkswagen made false and misleading statements to investors about vehicle quality, environmental compliance, and the company's financial standing.

"Issuers availing themselves of American capital markets must provide investors with accurate and complete information," said Stephanie Avakian, Co-Director of the Division of Enforcement. "As we allege, Volkswagen hid its decade-long emissions scheme while it was selling billions of dollars of its bonds to investors at inflated prices."

Volkswagen shares were marked 0.31% higher by mid-day trading in Frankfurt Friday and changing hands at €144.60 each, a move that edges the stock's year-to-date gain past 4% and values the Wolfsburg, Germany-based automaker at around €74 billion.

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The world's second-largest automaker continues to struggle to put the $30 billion scandal behind it as it transitions towards clean-energy vehicles in overseas markets and adjusts to the banning of diesel-emitting cars in some of its biggest domestic cities.

Last year, Winterkorn was charged with conspiracy by the U.S. Department of Justice over his role in the dieselgate scandal, with prosecutors alleging that "Volkswagen's scheme to cheat its legal requirements went all the way to the top of the company."

Winterkorn was charged with four counts of violating U.S. Federal law, according to the indictment, which was first sealed in March of 2018, including conspiring with "other senior VW executives and employees to defraud the United States, defraud VW's U.S. customers and violate the Clean Air Act by making false representations to regulators and the public about the ability of VW's supposedly "clean diesel" vehicles to comply with U.S. emissions requirements."

Volkswagen agreed a $4.3 billion settlement with the DoJ and pledged to pay a further $25 billion to U.S. car owners, and buy back 500,000 diesel-engine cars, after admitting to the use of so-called "cheat devices" in VW cars designed to evade emissions standards.