FRANKFURT -- Volkswagen Group confirmed that prosecutors were probing VW brand chief Herbert Diess as part of an investigation into whether the company violated disclosure and market manipulation rules.
At stake is whether VW managers were negligent by taking too long to disclose the carmaker's involvement in an emissions test cheating scandal.
Prosecutors in Brunswick in VW's home state of Lower Saxony took up the case after a probe by German financial markets regulator BaFin found that there were "sufficient real signs" that VW could have had a reason to disclose the financial consequences of its emissions scandal prior to VW's admission on Sept. 22, 2015.
A VW spokesman on Tuesday said the carmaker has made a statement to BaFin and has so far seen no indication of market manipulation.
VW hired Diess, a former BMW development chief, last July to turn around the troubled VW namesake brand.
The prosecutors office on Monday said that ex-VW CEO Martin Winterkorn and a current board member were under investigation for suspected market manipulation, but declined to name the board member.
Sources said that Bafin has filed a complaint with prosecutors against the entire former VW Group board over possible market manipulation. A person familiar with the legal proceedings told Reuters that Bafin saw the former board as having collective responsibility in the case and that prosecutors may widen the probe to include other executives.
At the time the scandal broke in 2015, the board included current CEO Matthias Mueller, who was then in charge of the Porsche brand, and current chairman Hans Dieter Poetsch, who was VW's chief financial officer. Some investors were critical of both Poetsch and Mueller's appointments in the aftermath of the emissions revelations, saying the company should have picked outsiders to ensure a clean break with the past.
Klaus Ziehe, a spokesman for the Brunswick prosecutor's office, declined to say how many people were the subject of Bafin's complaint.
"The fact that we marked two people down as suspects does not necessarily mean that Bafin's complaint was focused on these two people," Ziehe said, adding that it also could not be excluded that the investigation could be widened or narrowed. "This is an ongoing procedure and the number of suspects is not cast in stone," he said.
VW acknowledged in its annual report on April 28 that it had not grasped the potential impact of the scandal until last summer when it realized that software in its cars may have violated U.S. environmental law. Executives thought the issue was controllable with a view to the overall business activities of the company, it said.
Evercore ISI analyst Arndt Ellinghorst said he thought it would be difficult to prove that management deliberately misinformed the market in order to manipulate the share price.