1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 IN RE: VOLKSWAGEN “CLEAN Case No. 19-cv-01391-CRB

DIESEL” MARKETING, SALES

9 PRACTICES, AND PRODUCTS

LIABILITY LITIGATION ORDER GRANTING AGREED

10

MOTION FOR ENTRY OF FINAL

JUDGMENT

11 This Document Relates to: 12 U.S. S.E.C. v. Volkswagen AG, No. 3:19- 13 cv-1391-CRB. 14 The Securities and Exchange Commission (“SEC”) and Defendant Volkswagen 15 Group of America Finance, LLC (“Defendant”) reached a settlement and jointly move for 16 entry of final judgment. For the reasons described below, the Court GRANTS the motion. 17 I. BACKGROUND 18 In 2019, the SEC brought a civil enforcement action alleging that Defendant, among 19 others, perpetrated a massive fraud to mislead “United States investors, consumers, and 20 regulators as part of an illegal scheme to sell its purportedly ‘clean diesel’ cars and billions 21 of dollars of corporate bonds in the United States,” in violation of the Securities act of 22 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”). See 23 Am. Compl. (dkt. 49) ¶¶ 1, 24. The SEC sought a permanent injunction, disgorgement 24 with prejudgment interest, and civil penalties. Am. Compl. ¶ 24. 25 In February 2024, Defendant agreed to settle the SEC’s charges and, “[w]ithout 26 admitting or denying the allegations of the amended complaint,” consented to entry of the 27 Proposed Final Judgment (dkt. 135-1). See Consent (dkt. 135-2) at 1. 1 enjoined from future violations of Section 10(b) of the Exchange Act and Section 17(a) of 2 the Securities Act, and (2) ordered to pay disgorgement of $34,350,000, plus prejudgment 3 interest thereon in the amount of $14,400,000. See Proposed Final Judgment at 2–3. 4 Defendant’s payments will be put in a segregated fund established by the SEC, to be 5 distributed “to affected investors subject to the Court’s approval.” Id. at 4. In addition, 6 Defendant waived its right to appeal from the Proposed Final Judgment. Id. at 1; Consent 7 at 2. 8 The Proposed Final Judgment, along with a subsequent stipulation, see Stipulation 9 (dkt. 135-3), “will fully resolve the SEC’s claims against all Defendants in this lawsuit 10 involving the three bond offerings in 2014 and 2015.” Mot. at 4. 11 II. LEGAL STANDARD 12 Approval of a settlement in an SEC enforcement case is appropriate “[u]nless a 13 consent decree is unfair, inadequate, or unreasonable . . . .” SEC v. Randolph, 736 F.2d 14 525, 529 (9th Cir. 1984). A court “need not require that the decree be ‘in the public’s best 15 interest’ if it is otherwise reasonable.” United States v. Oregon, 913 F.2d 576, 581 (9th 16 Cir. 1990) (quoting Randolph, 736 F.2d at 529). Courts give deference “to the judgment 17 of the government agency which has negotiated and submitted the proposed judgment.” 18 Id. 19 To determine whether a settlement meets the “fair, adequate and reasonable” 20 standard, courts consider first the procedural fairness, and then the substantive fairness. 21 See United States v. Coeur d’Alenes Co., 767 F.3d 873, 877 (9th Cir. 2014). If “the court 22 is satisfied that the decree was the product of good faith, arms-length negotiations, a 23 negotiated decree is presumptively valid.” Oregon, 913 F.2d at 581. 24 III. DISCUSSION 25 The Proposed Final Judgment satisfies the above factors, and the Court therefore 26 grants the parties’ motion for entry of final judgment. 27 First, the Court finds that the Proposed Final Judgment is the product of “good faith, 1 entities represented by counsel, engaged in “years of extensive discovery and arm’s-length 2 negotiations” and this “good-faith compromise of contested claims” followed. See Mot. at 3 2. Accordingly, the Court concludes that there is no procedural unfairness. 4 Second, the Court finds that the terms of the Proposed Final Judgment are 5 substantively fair, adequate, reasonable. “A court evaluating a proposed S.E.C. consent 6 decree for fairness and reasonableness should, at a minimum, assess (1) the basic legality 7 of the decree . . .; (2) whether the terms of the decree, including its enforcement 8 mechanism, are clear . . .; (3) whether the consent decree reflects a resolution of the actual 9 claims in the complaint; and (4) whether the consent decree is tainted by improper 10 collusion or corruption of some kind.” U.S.S.E.C. v. Citigroup Glob. Markets, Inc., 752 11 F.3d 285, 294–95 (2d Cir. 2014). 12 The Proposed Final Judgment includes the following remedies: a permanent 13 injunction from future violations of the federal securities laws, disgorgement of profits, and 14 prejudgment interest on the disgorgement amount. See Proposed Final Judgment at 4. 15 These are all legal remedies. See SEC v. Rothenberg, 2018 WL 11436313, at *2 (N.D. 16 Cal. Oct. 16, 2018) (injunction); Liu v. SEC, 140 S. Ct. 1936, 1940 (2020) (disgorgement); 17 SEC v. Platforms Wireless Intern. Corp., 617 F.3d 1072, 1099 (9th Cir. 2010) 18 (prejudgment interest). The terms of the Proposed Final Judgment, including as to the 19 scope of the injunction, the process for paying disgorgement and prejudgment interest, and 20 the enforcement mechanism are clear. See Proposed Final Judgment at 2–4. The Proposed 21 Final Judgment also resolves all outstanding claims in the litigation against Defendant,1 22 and Defendant waives its right to appeal from it. Id. at 1–4; see Mot. at 3. Finally, there is 23 no indication that the Proposed Final Judgment is tainted by any improper collusion or 24 corruption. 25 The Court also finds that the Proposed Final Judgment is in the public interest, as 26 the SEC has secured injunctive and monetary relief, and the funds will be redistributed to 27 1 || the affected investors. That this result occurs without the time and expense of a trial on 2 || lability further benefits the public. 3 The Court is satisfied that the Proposed Final Judgment is fair, adequate, and 4 || reasonable—especially given the deference owed to the SEC. Randolph, 736 F.2d at 529. 5 || IV. CONCLUSION 6 For the foregoing reasons, the Court GRANTS the parties’ agreed motion for entry 7 || of final judgment. The Court will issue an order to enter the Proposed Final Judgment. 8 9 IT ISSO ORDERED. 10 Dated: April 3, 2024 Zz =

CHARLES R. BREYER

11 United States District Judge 12

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