German carmaker Volkswagen is being sued for $3.67 billion in damages by institutional investors after the company’s share prices plunged in the wake of its emission cheating scandal.
The lawsuit was filed in Braunschweig, which has legal jurisdiction over the city of Wolfsburg, where Volkswagen is based.
In a statement made available on Tuesday, the lawyers representing the investors said they are claiming damages after Volkswagen failed to inform relevant financial markets in a timely manner of the risks associated with an investigation by U.S. environmental authorities.
The U.S. Environmental Protection Agency (EPA) found Volkswagen to be in violation of the Clean Air Act, after it discovered that many of Volkswagen’s cars being sold in America had special software installed which detects when the car was being emission-tested. The software would then automatically alter the car’s diesel engine’s performance so it could fudge the results.
According to the EPA, Volkswagen engines emitted nitrogen oxide pollutants of up to 40 times over the limit set in the Clean Air Act without the special software installed.
Volkswagen has admitted to the existence of the cheating software. It said nearly 11 million vehicles worldwide are affected.
The German carmaker is setting aside $7.44 billion to recall affected vehicles worldwide. It could also face a fine of roughly $20 billion by the EPA.
Volkswagen’s shares have shed around 30% of their value since the emission scandal broke out in September 2015.