Volkswagon (VLKAY) Looking at Massive Fines

Markets were up in trading today, despite a relatively sluggish trading volume. The NASDAQ was slowest of all, mostly due to a rough day in the biotech sector that hit the index especially hard. The Dow gained 125.61 points and closed the day at 16,510.19. The NASDAQ was up just 1.73 points and closed out the trading day at 4,828.96. The S&P 500 jumped almost 9 points, and closed out the day at 1,966.97.

In international trading, markets were mixed. Asia was down slightly today, with Japan losing nearly 2% in trading today. Japan’s Nikkei was down over 350 points while Hong Kong’s Hang Seng dropped 163.
In Europe, both London and Germany posted gains. London was up slightly, the FTSE got a 4.5 point bump today. Germany posted a 32 point gain.

Volkswagon (VLKAY) Could Pay $18 Billion in Fines

After being caught with devices installed in their cars that are made to thwart emissions testing, Volkswagon (VLKAY) could be on the hook for as much as $18 billion in fines from the US Government. The problem is that the devices interact with emissions testing software in order to provide customized results, rather than a real readout of what emissions the car is producing.

What this means for shareholders is yet to be seen, but the fines and fees could be massive. If it’s determined that the devices were installed to purposefully and willfully mislead emissions investigators there is still the potential for criminal charges. Still, even if there aren’t criminal charges, Volkswagon has admitted responsibility for installing the devices.

There is little precedent for a car company misleading the government in this way. General Motors (GM) of course has had problems with faulty airbags, but there is no evidence that the devices were installed on purpose. By contrast, Volkswagon has already admitted their guilt. The fallout could be enough for the government to levy some of the heftiest fines ever seen.

In trading today, shares of Volkswagon (VLKAY) fell by over 17%. The share price plunged as investors rushed to sell off their position in the company as fast as possible. Volswagon stock closed out the day at $30.10 per share.
Published on Sep 21, 2015
By Aaron Phillips
Aaron Phillips is a financial researcher and journalist based out of Michigan. He regularly writes the IG Daily and IG Weekly columns.

Copyrighted 2020. Content published with author's permission.

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