F Stock – Volkswagen hoaxes media with fake statement on name change
Volkswagen of America issued false statements this week saying it would change its brand name to “Voltswagen,” to stress its commitment to electric vehicles, only to reverse course on Tuesday (US time) and admit that the supposed name change was a joke.
Mark Gillies, a company spokesman, confirmed on Tuesday that the statement had been a pre-April Fool’s Day joke after having insisted Monday that the release was legitimate and the name change accurate. The company’s false statement was distributed again on Tuesday, saying the brand-name change reflected a shift to more battery-electric vehicles.
Volkswagen’s intentionally fake news release, highly unusual for a major public company, coincides with its efforts to repair its image as it tries to recover from a 2015 scandal in which it cheated on government emissions tests and allowed diesel-powered vehicles to illegally pollute the air.
In that scandal, Volkswagen admitted that about 11 million diesel vehicles worldwide were fitted with the deceptive software. The software reduced nitrogen oxide emissions when the cars were placed on a test machine but allowed higher emissions and improved engine performance during normal driving. The scandal cost Volkswagen €30 billion ($46.2 billion) in fines and civil settlements and led to the recall of millions of vehicles.
The company’s fake news release, leaked on Monday and then repeated in a mass email to reporters Tuesday, resulted in articles about the name change in multiple media outlets.
The fake release could land Volkswagen in trouble with US securities regulators because its stock price rose nearly 5 per cent on Tuesday, the day the bogus statement was officially issued. Investors of late have been responding positively to news of companies increasing electric vehicle production, swelling the value of shares of Tesla as well as of some EV startups.
“It is incredibly stupid, but if being stupid were illegal, a third of the CEOs in the US would be in jail.”
Erik Gordon, a business and law professor at the University of Michigan
James Cox, who teaches corporate and securities law at Duke University, said the Securities and Exchange Commission should take action to deal with such misinformation, which can distort stock prices.
“The whole market has gone crazy,” Cox said. “We need to throw a pretty clear line in the sand, I believe, about what is permissible and what isn’t permissible.”