Litigation funder Bentham Europe has announced it will coordinate and back a shareholder action against Volkswagen in connection with the motor giant's emissions scandal.
The funder said that it has held discussions with institutional investors worldwide to fund a shareholder action in Germany.
The legal action will allege breaches of German securities law over an eight-year period, with lawyers from a leading commercial litigation firm to be instructed as soon as possible.
Bentham said recent disclosures about fuel-emissions systems have reduced the VW share price from around £118 to £74, and that a legal claim will allow shareholders to seek compensation for the alleged harm suffered.
Chief investment officer of Bentham Europe, Jeremy Marshall, said: ‘The apparent secret use of defeat devices by Volkswagen and the ensuing scandal that erupted upon disclosure of this practice has caused significant harm to Volkswagen’s reputation and financial position as well as raising serious concerns as to the corporate governance regime within one of Germany’s blue-chip companies.
‘Shareholders - who saw billions wiped off the value of Volkswagen in two days - deserve more than just an apology.’
Bentham Europe says it will pay claimants’ costs and indemnify claimants against adverse costs, but the company could not say how much has been allocated to the action.
Funding is available to all current and former shareholders who acquired at least 10,000 Volkswagen shares on a German or European exchange during the period 1 January 2007 to 18 September 2015 inclusive.
It is believed to be the first litigation funder to commit to a group action following the discovery and publication of the emissions issue. Bentham Europe last year started a similar action on behalf of shareholders of retail giant Tesco.
The shareholder actions in Germany will claim that Volkswagen has failed to inform the market of the use of defeat devices for at least five years, and possibly longer, and that this information constitutes inside information under the relevant German legislative provisions and should have been immediately released to the market.
It is believed that 11m, including 1.2m in the UK, diesel engine cars are affected by the problem amongst the VW brands.
The company has pledged to tell customers in the coming weeks and months how refits will take place.
Law firms in the UK have already started putting together potential client lists of customers who have bought cars with VW engines who may be considering legal action.
A letter from national firm Leigh Day to new VW leader Matthias Muller this week demanded a full refund for customers and compensation for other related losses.
The letter stated: ‘If it is found that defeat devices have been used in our clients’ vehicles, this undoubtedly amounts to a misrepresentation and a breach of contract.’