Volkswagen AG (known internationally as the Volkswagen Group) is one of the worlds leading automobile manufacturers and the largest carmaker in Europe. The Group comprises twelve brands from seven European countries: Volkswagen Passenger Cars, Volkswagen Commercial Vehicles, Audi, SEAT, KODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Scania, and MAN. Each brand has its own character and operates as an independent entity on the market. The product spectrum ranges from motorcycles to small cars and luxury vehicles. Defendant Volkswagen AG operates 118 production plants in 20 European countries and 10 countries in the Americas, Asia and Africa. Volkswagen AG sells its vehicles in 153 countries. Volkswagen AG is a German corporation with its principal executive offices in Wolfsburg, Lower Saxony, Germany. Volkswagens ADRs trade over-the-counter under the ticker symbol VWAGY. Defendant Volkswagen AG is the parent corporation and sole owner of Volkswagen Group of America, Inc. Volkswagen AG directly controls and directs the actions of Volkswagen Group of America, Inc., which acts as its agent in the United States. Volkswagen Group of America, Inc. is a wholly owned subsidiary of Volkswagen AG. It operates a manufacturing plant in Chattanooga, Tennessee and houses the U.S. operations of Volkswagens brands including Volkswagen, Audi, Bentley, Bugatti, and Lamborghini. Headquartered in Herndon, Virginia, the company has approximately 8,000 employees in the United States and sells its vehicles through a 1,000-strong dealer network. On March 29, 2021, Volkswagen published a draft of a press release on its website for a short time with the incorrect date of April 29, announcing its purported name change from Volkswagen to Voltswagen. The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding Volkswagens business and operations. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the name Voltswagen was never going to be used by the Companys U.S. subsidiary; (ii) the Company and its spokespeople purposefully misled reporters, even after the reporters inquiries about whether the name change was an April Fools joke; and (iii) as a result, Defendants public statements and statements to journalists were materially false and/or misleading at all relevant times. On Tuesday, March 30, 2021, still two days before April Fools Day on April 1, The Wall Street Journal (WSJ) reported that a spokesman for the Company in Wolfsburg, Germany stated that [t]he whole thing was just a marketing action to get people talking about the ID.4. The WSJ also quoted a Companys official back in Germany: [t]here will be no name change. On March 31, 2021, Agence France-Presse (AFP) quoted Volkswagen AGs spokesman, Deputy Head of Corporate Communication, Christoph Ludewig: Volkswagen of America developed . . . a national US marketing campaign, with a wink, to draw attention to Volkswagens e-offensive. From the start, the goal was to generate attention for an important corporate and industry topic in the USA. The large amount of positive feedback on social media shows we achieved this goal. At the same time, we regret if in the eyes of some, we overshot the mark of the campaign. AFP also reported that [r]eporters reacted angrily to the stunt, with some pointing out that it was tone-deaf coming from a company still recovering from the 2015 dieselgate scandal, when Volkswagen was forced to admit it had for years used cheating software in cars to dupe emissions tests. Phil Chetwynd, Global News Director of AFP, wrote to the Company to protest against the deception, stating: We understand when a spokesperson is not in a position to confirm or comment on a piece of information. But we never expect them to make false statements. We strongly think serious journalists and news outlets should not be used by companies like Volkswagen for marketing and advertising purposes. For us it is a very grave breach of trust which must not be repeated. The price of Volkswagen ADRs plummeted on this news, falling 3.84%, or $1.45 per share, to close at $36.3 per share on March 31, 2021 (from a closing price of $37.75 per share on March 30, 2021), damaging investors. On April 1, 2021, Forbes published an article, entitled Volkswagens April Fools Stunt Misses the Markand an Opportunity to Earn Back Trust, which similarly criticized Volkswagen AGs purported name change. The price of Volkswagen ADRs continued to fall as the market continued to process the news about the purported name change. The Companys ADR price fell 1.98%, or $0.72 per share, to close at $35.58 per share on April 1, 2021 (from a closing price of $36.3 per share on March 31, 2021), damaging investors. In total, Volkswagens ADR price fell by $2.17 per share, or 5.75%, over the course of two trading days from March 31, 2021 through April 1, 2021, damaging investors.
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