FRANKFURT -- Volkswagen Group's two top leaders, CEO Herbert Diess and Chairman Hans Dieter Poetsch, were charged with market manipulation in Germany over allegations they failed to inform investors early enough about the automaker's diesel-emissions scandal.
Former CEO Martin Winterkorn was also charged in the case.
Prosecutors in Brunswick in VW's home state of Lower Saxony, Germany, filed the indictment on Tuesday, the authority said in a statement.
The executives intentionally failed to inform investors in time about the financial impact of the scandal, the prosecutors' office said.
VW's supervisory board said its executive committee would convene immediately to discuss the indictment. The board had already discussed the possibility of an indictment, a VW spokesman said in a statement.
Diess will keep his role as CEO and continue to defend himself with all legal means, his lawyers said on Tuesday. Diess only joined the automaker in July 2015 and it was not foreseeable for him that diesel issues would have financial consequences that were relevant for the capital market, the attorneys said.
With their top managers now in the firing line, VW is facing a dramatic setback in the scandal that has been haunting the automaker since September 2015, which is when the company admitted that it used a software in 11 million diesel vehicles to cheat on emissions tests.
The toll at the Wolfsburg-based company has reached 30 billion euros ($33 billion) in fines and other expenses so far.
The market-manipulation probe was prompted by Germany’s financial regulator, Bafin, which in mid-2016 asked prosecutors to investigate Winterkorn and Diess. Three months later, Poetsch was added as a suspect.
Poetsch's lawyer said the charge was "implausible" and "unfounded." Poetsch, who was VW's chief financial officer, when he scandal broke, could not have foreseen that the exhaust gas manipulations were deliberate nor the financial sanctions of the US authorities, said lawyer Norbert Scharfmit.
Winterkorn's lawyer said the former CEO had no early knowledge of the use of prohibited engine control software in the automaker's diesel cars. Essential information that would have enabled Winterkorn to judge the problems correctly did not reach him at the right time, lawyer Felix Doerr said.
Winterkorn, resigned in the days after the scandal broke. He told German lawmakers in early 2017 that he did not find out about the cheating any earlier than VW had officially admitted.
Diess was chief of the VW brand at the time and had joined the company in July 2015, just months before the rigging became public.
VW shares lost up to 37 percent in value in the days after the scandal broke. If investors had known about VW's cheating, they might have sold shares earlier or not made purchases, plaintiffs have argued.
The Brunswick prosecutors said the U.S. authorities had been investigating whether VW's diesel cars had been fitted with a "defeat device" to disguise high NOx emissions since 2014 and the situation deteriorated further in the spring of 2015 with "growing and persistent inquiries" from the authorities.
"Due to the considerable financial consequences resulting from the explosive nature of the issue, the defendants were aware that the capital market had to be informed. However, they deliberately refrained from the necessary ad-hoc announcement in order to keep the stock market price of VW shares at the previous level and to avoid losses of VW AG," the prosecutors said.
Court proceedings are underway in Germany over VW's admission in 2015 to using illegal engine control software to rig emissions tests.
The Brunswick prosecutors' indictment of stock market manipulation is part of a separate legal push.
Bloomberg, Reuters and Automobilwoche contributed to this report
