Volkswagen engineers are in charge of internal trading related to the Rivian joint venture

The US Department of Justice has charged two Volkswagen engineers with securities fraud over an alleged insider trading scheme linked to the German automaker’s joint venture with Rivian.

Indictmentrevealed on Friday by the US Attorney for the Southern District of New York, alleges that Michael Stump and Marcus Blank obtained more than $300,000 using confidential inside information. Stamp and Plank allegedly bought Rivian stock and options after learning that the electric car maker and Volkswagen planned to form a joint venture — internally codenamed “Project Climb” — but before the companies made any public announcements.

Rivian and Volkswagen have announced their plans to Joint venture on June 25, 2024, which will focus on developing electric vehicle engineering and software. Volkswagen has initially committed to investing $5 billion in Rivian, with capital being released as the companies reach certain milestones. The joint venture has since grown to $5.8 billion, which is what Volkswagen has now achieved Rivian’s largest shareholder.

Rivian’s stock price rose 23% after the initial announcement in June. Stamp and Plank then allegedly sold their positions at Rivian, with Stamp making about $250,000, Plank making about $50,000, and a close family member of Plank making about $12,000, as detailed in the indictment.

US Attorney Jay Clayton said in a statement on Friday:

Michael Stump and Marcus Blank’s alleged exploitation of their employer’s confidential information allowed them to reap more than $300,000 in illegal profits. When people misuse confidential information for their own financial gain, they undermine the principles that allow our markets to operate fairly and efficiently. Insider trading is a crime that New Yorkers want to aggressively pursue. Its effects ripple through the financial system, harming ordinary investors and eroding public confidence. Today’s charges underscore the commitment of this Office and our law enforcement partners to protecting the integrity of our markets and holding accountable those who choose to violate the law.

Investigators claim that the engineers realized that their actions were illegal. Eight days before announcing the joint venture, Stamp searched the “statute of limitations on insider trading,” and a close family member of Blank searched in German for “How is insider trading prosecuted?”, according to the indictment.

The couple, who live in San Jose, were arrested on Friday and will appear in the US District Court for the Northern District of California. The case was referred to U.S. District Judge Katherine Polk Failla. Stamp and Plank face up to 25 years in prison if convicted of federal securities fraud.

Rivian declined to comment. A Volkswagen spokesman said the company is aware of the action taken by the Ministry of Justice today regarding two individuals.

“The action focuses on specific individuals and does not include allegations against the company,” a Volkswagen spokesperson said in an emailed statement. “As this is an ongoing matter, we cannot comment further.”

The article has been updated to include Volkswagen’s commentary.