The U.S. Department of Justice has indicted two engineers from Volkswagen on charges of securities fraud due to an alleged insider-trading scheme related to the automaker’s partnership with Rivian.

The indictment, made public on Friday by the U.S. Attorney for the Southern District of New York, claims that Michael Stamp and Marcus Plank profited over $300,000 by leveraging confidential insider knowledge. They are accused of purchasing Rivian stock and options after discovering that Volkswagen and the EV manufacturer intended to establish a joint venture — referred to internally as “Project Climb” — but before any announcements were made to the public.

Rivian and Volkswagen revealed their plans for the joint venture on June 25, 2024, aimed at developing electric vehicle architecture and software. Volkswagen originally pledged to invest $5 billion in Rivian, with funds being available as the companies meet specific goals. The venture has since expanded to $5.8 billion, with Volkswagen now holding the position of Rivian’s largest shareholder.

Following the announcement in June, Rivian’s stock experienced a 23% increase. Stamp and Plank reportedly offloaded their investments in Rivian, with Stamp earning around $250,000 in profits, Plank generating approximately $50,000, and a close family member of Plank making about $12,000, as outlined in the indictment.

U.S. Attorney Jay Clayton stated in a press release on Friday:

Michael Stamp and Marcus Plank’s purported misuse of their employer’s confidential information enabled them to garner over $300,000 in illicit gains. When individuals exploit confidential information for personal financial benefit, they impair the foundational principles that ensure our markets operate fairly and effectively. Insider trading is a crime that the residents of New York expect to be prosecuted vigorously. Its ramifications permeate the financial ecosystem, affecting regular investors and diminishing public trust. Today’s indictment highlights our Office’s and our law enforcement partners’ dedication to safeguarding the integrity of our markets and holding accountable those who opt to breach the law.

Investigators assert that the two engineers were aware that their actions were unlawful. Eight days before the joint venture was publicly disclosed, Stamp searched for “statute of limitations insider trading,” and a close relative of Plank searched, in German, “how is insider trading prosecuted?,” according to the indictment.

The two, both residing in San Jose, were apprehended on Friday and are set to appear in the U.S. District Court for the Northern District of California. The proceedings have been assigned to U.S. District Judge Katherine Polk Failla. Stamp and Plank could face up to 25 years in prison if found guilty of federal securities fraud.

Rivian has opted not to comment. A spokesperson from Volkswagen stated that the company is aware of the Department of Justice’s actions today concerning two individuals.

“The proceedings pertain to specific individuals and do not involve allegations against the company,” the Volkswagen spokesperson communicated in an email statement. “As this matter is ongoing, we are unable to provide additional comments.”

The article was revised to include Volkswagen’s response.