Black Diamond Offshore and Elliott Associates LP appealed U.S. District Judge Harold Baer’s ruling, which dismissed their lawsuits against sports car maker Porsche Automobil Holding SE. The lawsuits claim Porsche cost the hedge funds more than $2 billion by misleading short-sellers in its acquisition of Volkswagen AG shares in 2008.
Baer dismissed complaints by the two hedge funds on Dec. 30, 2010 in Manhattan. The two hedge funds, which represent a total of 39 U.S. and foreign-based funds, accused Porsche of secretly cornering the market in VW shares.
The short sellers said Porsche misled investors by denying through much of 2008 that it intended to acquire VW and by using manipulative trades to hide its stock positions. On Oct. 26, 2008, Porsche said that it held most of VW's common stock, causing the shares to surge as short-sellers raced to cover their positions.
Porsche’s spokesman Albrecht Bamler said the New York court fully upheld Porsche's request and he added that Porsche will fight the appeal recently filed in New York.
The sports carmaker took a step toward its planned merger with VW, after the company's shareholders on Nov. 30, 2010 supported a EUR5 billion stock sale to reduce debt. Porsche agreed to merge with VW in August 2009 after a botched attempt by Porsche to take control of VW. [via BusinessWeek]