Five Companies Whose Litigation Could Affect Their Bottom Line

Litigation isn’t something that anyone wants. This is particularly true for publicly-traded companies whose stock price could be dramatically affected. Even the hint of bad news in the press can send a stock spiraling. Having a lawsuit filed against your company is, indeed, a great way to devalue your stock price.

Of course, in many cases, litigation is just par for the course for businesses. But there are still lawsuits that come up that will affect anyone’s bottom line. Year after year, lawsuits surface at the most inopportune times for some companies, and 2017 is no different. We’ll just talk about a few of these companies below. Some of them are in the midst of litigation while others have just awarded huge settlements. In any event, you can expect them to take somewhat of a financial toll in the coming year.

1. Volkswagen

It’s no secret that Volkswagen (VLKAY) underwent a very public emissions fraud scandal beginning in September 2015. Essentially, the German car manufacturer equipped 11 million diesel-powered vehicles worldwide with what were known as “defeat devices.” This software essentially allowed the car to recognize when it was being given an emissions test and to fraudulently produce emissions that passed the test. In reality, the cars were producing emissions that far exceeded the legal limit.

When the U.S. Environmental Protection Agency (EPA) discovered this irregularity, VW’s stock dropped precipitously (a full 50%), and it posted its first quarterly loss in 15 years. Over the course of the following year and a half, Volkswagen’s stock has rebounded, but it’s again coming up against some logistical and litigious road blocks.

For starters, the company paid $4.3 billion in January of this year to settle the U.S. Justice Department’s criminal and civil case against them, which is on top of the $14.7 billion it doled out for civil claims and the $1.2 billion for Volkswagen and Audi dealerships. Oliver Schmidt, a VW executive was also arrested that month by the FBI, and five other executives were charged with fraud.

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Disclosure: I have no positions in any stocks mentioned.  I am not receiving compensation for this article. I have no business relationship with any company whose stock is mentioned in this ...

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Barry Hochhauser 4 years ago Member's comment

I was certainly familiar with the $WFC and $VLKAF fiascos, but the rest of these were news to me. Thanks for making me aware.