“The initial suspicion of market manipulation is directed against two former board members of the VW Group. Among them is the former chief executive of the Volkswagen group, Professor Dr Martin Winterkorn,” said prosecutors in Lower Saxony where VW is based in a statement.
Investigators did not name the second suspect but said the individual was not the group's current chairman.
Listed companies are required to disclose information that could affect market prices immediately.
But VW complied with its disclosure obligation only on September 22, 2015, prosecutors said, four days after US regulators went public that they were charging the company for fitting devices designed to skew emissions data in their vehicles.
“There are sufficient indications suggesting that the obligation to make a disclosure statement could have been met at an earlier date,” prosecutors said.
Shares in VW plunged 17.14 percent on Monday September 21, the first trading day after the US charge was made public.
They sank another 19.82 percent on Tuesday, wiping out €25 billion euros in market capitalisation in two days.
Winterkorn stepped down as CEO of the car giant on September 23rd while denying any knowledge of the so-called defeat devices installed in the cars.