>>> US Top Gainers/ Losers

This week's top 20 % gainers
  • Healthcare: CARA (13.88 +21.43%)
  • Materials: ATI (21.83 +27.96%), GSV (2.78 +24.11%), HBM (8 +15.11%),
  • Industrials: TGH (14.4 +39.13%), TWI (13.17 +27.12%), MTW(7.5 +23.97%), TRTN (23.8 +23.44%), URI (128.26 +15.35%)
  • Consumer Discretionary: LRN (19.59 +15.92%), BOBE (55.2 +14.5%)
  • Information Technology: STX (44.5 +22.02%), IIVI (36.25 +17.5%), CLS (14.18 +17.38%), STM (13.59 +17.05%), LOGI (29.28 +16.42%)
  • Financials: GNBC (17 +20.57%), MKTX (179.82 +14.62%)
  • Energy: EMES (18.23 +14.8%)
  • Telecommunication Services: GSAT (1.66 +20.29%)
This week's top 20 % losers
  • Healthcare: NOVN (4.86 -77.75%), VIVO (12.7 -24.18%), NK(5.37 -13.94%), KERX (4.8 -11.6%), PTCT (12.82 -11.16%),CSLT (3.25 -10.96%)
  • Materials: AKS (8.07 -15.23%)
  • Industrials: KEYW (10.09 -14.27%)
  • Consumer Discretionary: SHLD (7.42 -20.47%), RH (26.09 -11.8%), MAT (26.49 -11.76%), BOOT (10.58 -11.09%), MIK (19.56 -11.09%)
  • Information Technology: QCOM (54.24 -13.74%), APTI (14.6 -11.25%)
  • Energy: EEQ (20.37 -19.96%), EEP (21.33 -14.47%), PEIX (7 -13.04%), STNG (3.84 -11.32%)
  • Telecommunication Services: BT (19.43 -20.04%)

>>> Barrons weekend summary: positive on ANTM, MGA

Barrons weekend summary: positive on ANTM, MGA 

* Cover story: "The Dow hitting 20,000 was no fluke. Today's stock prices are well supported by solid prospects for corporate earnings and economic growth"-and there's no reason the DJIA can't reach 30,000 if President Trump avoids a trade war. 

* Features: 1) Positive on ANTM: Company's No. 2 health insurer has the lowest P/E ratio among peers and the most room for improvement in profit margins and earnings, and bulls argue it could earn $20/share by 2020; 2) Positive on MGA: Unlike rivals, company can build an entire vehicle to a company's specs, as it does for customers like Daimler, and it should be able to maintain growth and increase market share despite a few concerns.

* Tech Trader: Positive on MSFT: Because of its cash horde and earnings power, shares of the tech giant now appear to be a better pick for investors than those of INTC, which may have less of an opportunity to benefit from a potential tax holiday on overseas cash. 

* Trader: It's a strange time for a market rally, because so many issues have yet to be resolved, and uncertainty remains about taxes, regulations, and other issues-while volatility could still rear its head; If Donald Trump succeeds in bringing factories back to the U.S., many jobs that come with them are likely to go to robots rather than to humans; Positive on AMZN: In normal times, the retailer would have difficulty breaking into the auto parts sector, but Trump administration rules about importing and tariffs could make the task easier for it. 
* Barron's Roundtable: Part three offers picks from Oscar Schafer (ABCO, AA, Liberty Global, INXN, ANIP), Brian Rogers (LM, CVS, CASY, DIS, BMY), and Abby Joseph Cohen (LLY, Olympus, BLUE, LG Chem, INTU, HMHC, Shenzhen Airport). 

* Profile: Suzanne Hutchins, lead manager of London-based Dreyfus Global Real Return, thinks the S&P 500 could fall by 40% or more from current levels, driven by excessive valuations and rising interest rates (top holdings: Treasury bonds and notes, ES, CMS, NVS, MSFT, Wolters Kluwer). 

* Small Caps: Positive on SYNT: Shares of infotech services company trade at a discount, but concerns appear to be overblown, and while there may not be any near-term catalysts for growth, the long term looks good. 

* Follow-Up: Positive on CTRP: There are promising signs for the company, which is growing its overseas business by adding more hotels and focusing on China; Cautious on IR: Shares are up, and could eke out a near double-digit return over the next year, but there are better bargains, and investors should take profits; Cautious on BIP: BAM's infrastructure division will have to reveal updated valuations for properties that had different values in the past, a situation that warrants investor scrutiny. 

* European Trader: Positive on Atlantia(ATL.IT): After getting past some hurdles, motorway and airport owner is looking to expand beyond Italy and restructure its business. 

* Asian Trader: Investors seeking shelter amid rising rates and a stronger dollar in Asia, a trade-dependent region likely to bear the brunt of Donald Trump's protectionist policies, should look to Indonesia," which is largely insulated from turbulence in world trade. 

* Emerging Markets: Indian prime minister Narendra Modi's reforms didn't produce much success last year, but India remains the fastest growing large emerging market, and could see GDP growth of 7% this year. 

* Commodities: "After a big rally in 2016, palladium prices are surging again. Despite the run-up, investors say there are still plenty of reasons to buy the volatile metal." 

* Streetwise: Rather than outsource its money management, Harvard University would do better to break with its endowment peers and consider greater equity indexation.

WSJ : Big Chinese Deals Stall on Capital-Outflows Clampdown

Big Chinese Deals Stall on Capital-Outflows Clampdown
Takeover pace slows on stricter policing of money leaving China

The pace of big Chinese takeovers abroad is slowing as buyers contend with rules tightening the flow of money out of the country and increased government scrutiny at home and overseas.

Bankers say many of the record-breaking $225 billion in overseas acquisitions Chinese companies announced last year are stalled by financial or regulatory hurdles—including the country’s biggest-ever deal, China National Chemical Corp.’s $43 billion bid for Syngenta AG, a Swiss seed and pesticide maker. European regulators this month extended the deadline for their review of ChemChina’s bid a second time, to April.

More Chinese acquirers are backing out of deals. While Chinese firms announced more than double the amount of overseas acquisitions last year versus the previous, the value of deals withdrawn in 2016 was up around sevenfold, to $38.39 billion, according to Dealogic. The average number of days it took a Chinese buyer to complete an overseas deal in 2016 edged upward throughout the year, with November and December notching the highest levels, at above 140 days, according to Dealogic.


A major factor behind the slowdown: stricter policing of overseas acquisitions by Chinese regulators to curb a flood of money leaving the country.



The resulting uncertainty about regulatory approvals has damped some investors’ enthusiasm for overseas deals. “It is unmistakable that Chinese investors are far more cautious amid mounting uncertainties,” said Fred Hu, chairman of Primavera Capital. Mr. Hu’s Chinese private-equity firm is a prominent deal maker involved in last year’s biggest U-turn: Anbang Insurance Group Co. dropping its $14 billion bid for Starwood Hotels & Resorts Worldwide Inc.
Mergers and acquisitions the world over go through cycles, and given the size, wealth and ambition of corporate China, financiers say the country’s surge in overseas, or outbound, deals is likely not stopping, but taking a break.

Some well-connected Chinese acquirers are still striking smaller deals. Ant Financial Services Group, an affiliate of online shopping giant Alibaba Group Holding Ltd., clinched a deal Thursday to buy U.S. money-transfer provider MoneyGram International Inc. for $880 million. Valeant Pharmaceuticals International Inc. also agreed to sell its Dendreon cancer business to Chinese conglomerate Sanpower for $820 million earlier this month.
“In the long run, the trend of China Inc. going global should not be affected” by the current foreign-exchange controls, said Wang Hongzhang, chairman of state lender China Construction Bank Corp., at a January event in Hong Kong. His bank offers financing for many Chinese outbound deals, including Anbang’s Starwood bid.
For now, though, Chinese companies are increasingly anxious about deals abroad—particularly the biggest, which get the most scrutiny.
Chinese regulators, including the Commerce Ministry and the country’s top economic-planning agency, must now clear many outbound deals larger than $1 billion, as well as everything more than $10 billion, before companies can get approval to move funds offshore, according to people with knowledge of the matter and documents reviewed by The Wall Street Journal. Regulators also are retroactively examining many pending deals that had earlier been approved, causing delays, according to people familiar with the matter.
State-owned China Resources Beer (Holdings) Co. dropped out of an auction for Eastern Europe brewing assets being sold by Anheuser-Busch InBev SA NV in December, after China’s economic-planning agency declined to approve its bid, according to people familiar with the situation. Representatives for China Resources and AB InBev declined to comment.
Meanwhile, Chinese deals continue to face scrutiny from overseas regulators. Australia this month said it will set up a new body to assess security risks of foreign investments, following a surge in Chinese bids to purchase everything from ports to electricity assets. Anbang’s $1.57 billion acquisition of U.S. life insurer Fidelity & Guaranty Life has stalled for more than a year because the Chinese insurer hasn’t provided enough detail on its ownership to satisfy state insurance regulators, people familiar with the matter said. One of these people said Anbang is in talks with New York regulators and plans to refile its application in the first quarter.

Many sellers are asking for money to be placed in offshore escrow accounts to ensure they get paid, a development that has become common in the past year, bankers and lawyers say. HNA Group deposited $500 million in a U.S. account as breakup fee for its $6.5 billion proposed purchase of a 25% stake in Hilton Worldwide Holdings Inc.
State-owned ChemChina already was grappling with a heavy debt load before it struck the Syngenta deal. Worries about those debt levels caused one Chinese state bank to pass on financing the bid, according to people familiar with the situation. ChemChina’s Chairman Ren Jianxin tapped HSBC Holdings PLC and China Citic Bank International Ltd. to lead the $33 billion loan-financing effort. The lack of strong backing from big state lenders raised questions among investors over whether the deal had full support from Beijing.
A ChemChina spokesman declined to comment and declined to make Mr. Ren available for comment.
The deal was approved in August by the Committee on Foreign Investment in the U.S., or CFIUS, which scrutinizes deals for national-security risks and has blocked several high-profile Chinese deals during the past few years. In Europe, antimonopoly regulators are still combing through ChemChina’s and Syngenta’s assets to determine what may need to be divested after extending the deadline twice.
China’s Commerce Ministry too has yet to give the nod, a person familiar with the matter said. It isn’t clear whether the Chinese economic-planning agency is currently examining the deal.
“ChemChina and Syngenta remain fully committed to the transaction and are confident of its closure,” said a Syngenta spokesman.
Mr. Ren has been undeterred by the delays, telling people around him not to worry about the fate of the Syngenta deal, and that the current obstacles won’t influence other potential deals, people familiar with the matter said.

FT : Active managers accuse FCA of using flawed data

Active managers accuse FCA of using flawed data
UK regulator’s damning report on competition in industry lead to ‘heated’ discussions

Active asset managers have accused the Financial Conduct Authority of using flawed and misleading data in the UK financial regulator’s far-reaching investigation into whether competition in the fund industry is working effectively.

The discord between active asset managers and the FCA came to a head last week when the regulator held a series of meetings with senior industry figures to discuss proposed reforms of the investment industry.

A senior investment professional who was present at one of the meetings, who requested anonymity, said the discussions became “very heated” with some “not very pleasant exchanges” between industry executives and FCA staff.

He said: “People are very cross. Does the FCA not understand that vilifying one of the UK’s gold-standard industries is not helpful, particularly in the context of the uncertainty surrounding Brexit and the likelihood that UK managers will not be able to continue to passport their funds into the single European market?”

The FCA meetings were set up after the regulator published a damning report last November that suggested charging structures across the industry should be overhauled to improve investors’ returns.

Active managers bore the brunt of the FCA’s criticism for failing to outperform their indices after fees, a finding that is consistent with a large body of academic evidence, and for failing to provide value for money for retail investors.

Active fund managers are increasingly questioning the quality and the breadth of the data used by the FCA.

Toby Illingworth, executive director at the New City Initiative, an organisation that represents the interests of 54 investment managers with combined assets of £400bn, said the FCA had failed to distinguish between various types of active funds.

“The FCA’s performance analysis bundled all active managers together, even though there are huge differences in the risks and returns generated across multiple strategies,” he said.

He added that there was “lots of evidence” to suggest that smaller managers were more nimble and delivered outperformance, even though they shouldered a heavier burden of regulatory costs.

He highlighted a controversial figure put forward by the FCA that indicated a £20,000 investment in a passively managed fund tracking the FTSE All-Share index over 20 years could yield a return 44 per cent larger than that of an actively managed equivalent.

Mr Ilingworth said this estimate was based on a period of strong equity market performance, whereas the real value of active management was demonstrated when stocks were more volatile or not performing well.

“Many of the consumers of active management are sophisticated investors. They would not pay the additional fees or invest in active managers if they did not feel there was a benefit,” he added.

The chief executive of a large fund house, who did not want to be named, said the FCA appeared to be suggesting that active managers had to take more risks if they wanted to justify their higher fees.

“But the holy grail of investing is to add value without taking disproportionate risks. Managers that delivered good returns with low levels of risk should be celebrated, not castigated,” he said.

The FCA declined to comment for this article.

>>> Conde Nast reorganisation prompts sale talk; Apple, Hearst, Google and Vice

Conde Nast reorganisation prompts sale talk; Apple, Hearst, Google and Vice Media possible bidders - report
28 JAN 2017
Conde Nast is to undergo a reorganisation that has prompted talk that the New York City-based magazine publisher is about to be put up for sale, The Times reported. There have been rumours for several months that Conde Nast’s owner, Advance Publications Inc., is working on a sale, the item said, without citing a source for the speculation.
It is thought that Conde Nast could attract offers from rival publisher HearstCorporation , the publisher of Elle magazine; the internet search company Google [NASDAQ:GOOGL]; Apple Inc. [NASDAQ:AAPL], a computer company; or Vice Media Inc., an online news media company, according to the report.
Conde Nast’s chief business officer Jim Norton said in an internal memo yesterday, 27 January that the commercial side of the company’s US division will be completely reorganised. Three heads of publishing are to step down, the item added.
The report also noted that the editor in chief of the UK edition of Conde Nast’s Vogue magazine Alexandra Schulman announced this week that she will be leaving the company. Speculation of conflict between Schulman and her counterpart at American Vogue, Anna Wintour, was denied by both sides, the article added.
Conde Nast’s UK Managing Director Nicholas Coleridge has already announced that he will resign his position in August, the item noted.
Background:
A Wall Street Journal report dated 15 September 2015 said the Newhouse family owns Advance Publications, Inc.

Reuters - German‎ watchdog suspected VW scam on CO2 emissions: report

German‎ watchdog suspected VW scam on CO2 emissions: report

Germany's motor industry watchdog raised suspicions Volkswagen (VOWG_p.DE) was using prototype vehicles to lower carbon dioxide (CO2) emissions in tests in 2015, soon after the carmaker's manipulation of diesel emissions tests was uncovered, the Berliner Zeitung newspaper reported on Saturday.
The newspaper quoted the Federal Motor Transport Authority (KBA) as telling VW in a November 2015 email it would choose test models randomly and appoint new experts to carry out testing because of doubts about the independence of the company's CO2 testing regime.
"VW has to give a declaration that they (vehicles submitted to tests) comply with standards for serial production models and were not subject to change in any way," the newspaper quoted the KBA's email as saying.
There was no immediate comment from a VW spokesman or the German Transport Ministry, which is home to the KBA.
It was not clear in Saturday's report whether the KBA remains concerned about the transparency of the carmaker's CO2 emissions tests.
VW admitted in November 2015 that besides rigging diesel emissions tests it had understated the fuel consumption and CO2 emissions of about 800,000 vehicles, only to announce a month later that follow-up tests had shown the CO2 irregularities affected less than 40,000 cars.

FT : VW car owners in EU face hard quest for compensation over scandal

VW car owners in EU face hard quest for compensation over scandal
Carmaker is resisting calls for US-style remedies in Europe after emissions affair

When Volkswagen pleaded guilty this month to criminal charges in the US over the German carmaker’s diesel emissions scandal, the company’s great hope was that it would be able to move on and focus on an ambitious strategy to become a leader in electric vehicles by 2025.

But in Europe, where almost 9m of the 11m VW diesel cars equipped with test-cheating software were sold, consumer litigation is just beginning.

Tens of thousands of VW car owners are demanding compensation — and thereby to be treated in the same manner as their counterparts in North America, where the scandal has cost the company more than $20bn. The latest part of this European effort will take place on Monday, when a London-based court holds a preliminary hearing on a case brought on behalf of more than 20,000 UK owners of VW cars.

However, having offered compensation and vehicle buybacks to US car owners caught up in the emissions affair, VW is strongly resisting calls by the European Commission and some other EU politicians for similar steps in Europe. And differences between US and EU legal systems mean the company is unlikely in Europe to face anything like the $21bn of scandal-related expenses it has run up in North America.

In the US, the case against VW was close to overwhelming. In September 2015 VW admitted it had installed illegal software dubbed a defeat device in about 500,000 diesel cars, which served to understate emissions of harmful nitrogen oxides in official tests.

The Washington-based Environmental Protection Agency sued VW, while hundreds of legal complaints by aggrieved US car owners were turned into one large case that amounted to a de facto class action lawsuit. A court in California overseeing this civil litigation demanded VW get the affected vehicles off the road as soon as possible, and because the company had no viable fix for them it was forced to offer a car buyback to about 480,000 owners of 2 litre diesel vehicles. In addition, car owners were offered at least $5,100 each.

But in Europe the legal position is far more nuanced. VW is in the peculiar position of having admitted to installing cheat software in almost 9m diesel cars — while at the same time maintaining the technology did not violate EU laws.

The problem for any lawyer fighting for damages is that, even though VW’s cheat software falls within the colloquial meaning of an illegal defeat device — anything intended to circumvent a vehicle emissions test — it is less clear the technology breaches the EU’s technical definition.

The applicable EU laws contained in a 2007 regulation defining illegal defeat devices refer to any element of design which alters “any part of the emission control system . . . [during] normal vehicle operation and use”.

One person familiar with VW’s legal strategy, who declined to be identified, said the company’s software was an “inter-engine measure”.

In other words, the technology affected NOx discharges before they reached the emission control system. Furthermore, the software was activated in test conditions in a laboratory, not during “normal” use on the road.

Meanwhile, while VW concedes its diesel cars could not pass strict US NOx emissions tests without cheating, the company argues that its European vehicles could in fact pass EU equivalents, which are less onerous.

Notwithstanding VW’s defence, Germany’s federal motor transport authority, or KBA, said in December 2015 the company’s software did constitute an illegal defeat device.

However, unlike the EPA, the KBA has not sued VW. And whereas the EPA rejected multiple proposals by VW to fix its US diesel cars, last month the KBA granted approval for VW to make changes to the near 9m vehicles in Europe affected by the affair, saying they would then would meet all EU requirements without harming performance.

Several lawyers acting on behalf of VW car owners in Europe reject the KBA’s authority to take this action. However, in contrast to the US, class action lawsuits are not part of German law, so while thousands of European car owners are suing VW, they are doing so on a case-by-case basis.

As VW’s home market, Germany is the EU country with the largest number of car owners affected by the scandal: a total of 2.4m.

But VW feels confident it can see off most of the German cases. German courts have already decided on more than 100 cases and, according to the company, they have sided with VW in roughly three-quarters of them. In each case where VW loses, it appeals. The incentive for individual consumers to sue is therefore small.

Ralph Sauer, partner at German law firm Dr Stoll & Sauer, has filed 1,200 cases on behalf of VW car owners in various German cities. He has more than 8,000 in the pipeline.

“VW is fighting every claim individually,” says Mr Sauer. “If they start to offer a big deal like they did in the US, they fear 2.4m people will want the same thing.”

In the UK, the law firms Harcus Sinclair and Slater & Gordon have applied on behalf of 24,000 British owners of VW cars for a so-called group litigation order, which has similarities to a US class action suit.

London’s high court will hear the application on Monday, but even if compensation is later awarded, VW is not expected to run up a similar bill to what it did with individual US car owners.

Indeed, VW has rejected the case for paying compensation in Europe. Chief executive Matthias Müller told German media last year that paying out some “arbitrary” amount in Europe could cause irreparable damage to VW given the number of cars involved.

VW says it will fix the software problem, and it can cite data — for instance from Dat Group, which compiles used car sales information — showing that the value of its European diesel vehicles have not fallen following the affair.

“To have compensation . . . you need a loss, and there is no evidence of a loss,” Paul Willis, head of VW in the UK, told the British parliament last year.

(ZH) Europe Proposes "Restrictions On Payments In Cash"

Europe Proposes "Restrictions On Payments In Cash"

Having discontinued its production of EUR500 banknotes, it appears Europe is charging towards the utopian dream of a cashless society. Just days after Davos' elites discussed why the world needs to "get rid of currency," the European Commission has introduced a proposal enforcing "restrictions on payments in cash."
With Rogoff, Stiglitz, Summers et al. all calling for the end of cash - because only terrorists and drug-dealers need cash (nothing at all to do with totalitarian control over a nation's wealth) - we are not surprised that this proposal from the European Commission (sanctuary of statism) would appear...


The Commission published on 2 February 2016 a Communication to the Council and the Parliament on an Action Plan to further step up the fight against the financing of terrorism (COM (2016) 50). The Action Plan builds on existing EU rules to adapt to new threats and aims at updating EU policies in line with international standards. In the context of the Commission's action to extent the scope of the Regulation on the controls of cash entering or leaving the Community, reference is made to the appropriateness to explore the relevance of potential upper limits to cash payments.
The Action Plan states that "Payments in cash are widely used in the financing of terrorist activities… In this context, the relevance of potential upper limits to cash payments could also be explored. Several Member States have in place prohibitions for cash payments above a specific threshold."


Cash has the important feature of offering anonymity to transactions. Such anonymity may be desired for legitimate reason (e.g. protection of privacy). But, such anonymity can also be misused for money laundering and terrorist financing purposes. The possibility to conduct large cash payments facilitates money laundering and terrorist financing activities because of the difficulty to control cash payment transactions.

...

Potential restrictions to cash payments would be a mean to fight criminal activities entailing large payment transactions in cash by organised criminal networks. Restricting large payments in cash, in addition to cash declarations and other AML obligations, would hamper the operation of terrorist networks, and other criminal activities, i.e. have a preventive effect. It would also facilitate further investigations to track financial transactions in the course of terrorist activities. Effective investigations are hindered as cash payments transactions are anonymous. Thus restrictions on cash payments would facilitate investigations. However, as cash transactions are moved to the financial system, it is essential that financial institutions have adequate controls and procedures in place that enable them to know the person with whom they are dealing. Adequate due diligence on new and existing customers is a key part of these controls in, line with the AMLD.

Terrorists use cash to sustain their illegal activities, not only for illegal transactions (e.g. the acquisition of explosives) but also for payments which are in appearance legal (e.g. transactions for accommodation or transport). While a restriction on payments in cash would certainly be ignored for transactions that are in any case already illegal, the restriction could create a significant hindrance to the conduct of transactions that are ancillary to terrorist activities.

...

Organised crime and terrorism financing rely on cash for payments for carrying out their illegal activities and benefitting from them. By restricting the possibilities to use cash, the proposal would contribute to disrupt the financing of terrorism, as the need to use non anonymous means of payment would either deter the activity or contribute to its easier detection and investigation. Any such proposal would also aim at harmonising restrictions across the Union, thus creating a level playing field for businesses and removing distortions of competition in the internal market. It would additionally foster the fight against money laundering, tax fraud and organised crime.
And then right at the end, they mention "fundamental rights"...


While being allowed to pay in cash does not constitute a fundamental right, the objective of the initiative, which is to prevent the anonymity that cash payments allow, might be viewed as an infringement of the right to privacy enshrined in Article 7 of the EU Charter of Fundamental Rights. However, as complemented by article 52 of the Charter, limitations may be made subject to the principle of proportionality if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others. The objectives of potential restrictions to cash payments could fit such description. It should also be observed that national restrictions to cash payments were never successfully challenged based on an infringement to fundamental rights.
Full Proposal Attached

WSJ : Germany Names Former Volkswagen CEO Martin Winterkorn as Suspect

Germany Names Former Volkswagen CEO Martin Winterkorn as Suspect
Investigation relates to Volkswagen’s long-running emissions scandal

FRANKFURT—German prosecutors on Friday named Volkswagen AG’s former Chief Executive Martin Winterkorn as a suspect in a fraud investigation as they widened their probe into a diesel emissions-cheating scandal, alleging that Mr. Winterkorn may have known about the issue earlier than he acknowledged.
Prosecutors launched the probe on Sept. 28, 2015, days after U.S. authorities disclosed Volkswagen’s emissions-cheating. Initially, Mr. Winterkorn was named as a suspect, but prosecutors retracted his name three days later. Friday’s announcement reinstates Mr. Winterkorn as a suspect in the fraud investigation based on new evidence.
Prosecutors said the indication that Mr. Winterkorn may have known about the software and its effect sooner than he has said publicly was based partly on the questioning of witnesses and suspects, as well as evaluation of seized data. The prosecutors’ statement about Mr. Winterkorn could bolster lawsuits from investors who are seeking nearly €9 billion ($9.65 billion) in damages.

Mr. Winterkorn resigned in September 2015, after U.S. authorities disclosed that Volkswagen had been cheating on emissions tests for a decade.
An attorney for Mr. Winterkorn said the former CEO would comment on the probe to investigators once he’s examined the evidence against him. Mr. Winterkorn told a German parliamentary investigative committee last week that he did not learn about the emissions-cheating software until September 2015, shortly before Volkswagen admitted cheating to U.S. environmental authorities.
Volkswagen spokesman Eric Felber said the company is “cooperating fully with investigators” but he couldn't comment on specifics because of the continuing investigation.
German prosecutors haven't charged anyone with wrongdoing in connection with the scandal. They have expanded the number of suspects under investigation to 37 from 21 after securing witness testimony and seizing files and data in raids on at least 28 private residences and businesses this week.
There are at least three separate investigations under way in Germany.
The largest is seeking to determine whether Volkswagen and its management committed fraud by knowingly rigging diesel engines to manipulate nitrogen oxide, or NOx, emissions.
Another investigation is looking into allegations that Volkswagen falsified carbon-dioxide levels listed on vehicle certifications.
A third probe is focused on Mr. Winterkorn, Volkswagen Chairman Hans Dieter Pötsch, and Herbert Diess, chief of the Volkswagen passenger car brand, to determine if the executives failed to inform financial markets about the pending U.S. investigation in a timely manner. All three men have denied any wrongdoing.
Prosecutors are also investigating a company attorney on suspicion that he encouraged other employees to destroy evidence linked to the diesel scandal.

Volkswagen this month pleaded guilty in the U.S. to charges that included conspiring to defraud the U.S. government and U.S. consumers by manipulating diesel engines to meet emissions targets during lab tests. The company agreed to pay a criminal fine of $4.3 billion after reaching settlements in civil law suits last year totaling up to $17.5 billion.
Volkswagen insists that the software, declared an illegal defeat device in the U.S., wasn't illegal in Europe.
When the scandal was disclosed, Volkswagen’s shares plunged, losing nearly half their value in days.
Volkswagen’s guilty plea in the U.S. included a statement of facts that made clear that dozens of employees were involved in the cheating. The company also admitted that one member of its legal team instructed a group of around 40 employees to remove evidence from Volkswagen’s computers in mid-2015, when it became clear that a U.S. investigation was pending.
The U.S. has so far indicted seven current and former Volkswagen employees in connection with the scandal. Several of these executives reported directly to Mr. Winterkorn.