Dealing with Corporate Scandal under European Market Abuse Law: The Case of VW

This paper uses the current proceedings against Volkswagen Aktiengesellschaft for violations of its continuous disclosure obligation as a backdrop for addressing fundamental questions of European market abuse law. Specifically, we ask how the Market Abuse Directive and Regulation (MAD/R) and Member State corporate law together shape management’s disclosure policy vis-à-vis the stock market. Taking the perspective of German stock corporation law, our main findings are twofold: First, while European market abuse law severely limits management’s discretion when market integrity is at stake, Member States can still largely control its influence on internal corporate governance – i.e., on the distribution of information between management and shareholders. Second, MAD and MAR directly draw on conceptions of public interest in Member State law when determining the outer bounds of issuers’ ability to delay disclosure, thereby potentially promoting compliance. Based on these insights, the paper then closes with a note of caution for national legislators and suggests a more profound discussion of their responsibility for the optimal functioning of European market abuse law.