As German prosecutors widened a probe prompted by Porsche’s botched attempt to take over Volkswagen, they stated that Porsche's former CEO Wendelin Wiedeking and ex-Chief Financial Officer Holger Haerter may have put the company at risk of collapse.
When it was reported last Thursday that the planned merger of Porsche and VW will be delayed by the investigation into the former CEO, the shares in Porsche plunged.
In 2009, Porsche tried to take over Volkswagen using complex financial derivatives, but its plan fell apart when its debt mounted, eventually forcing Porsche to accept a takeover by VW and leading it to terminate its management team.
Wiedeking and Haerter are being investigated for allegedly manipulating the market in VW shares and they are also the target of a U.S. lawsuit by hedge funds.
Stuttgart prosecutors said that they have dropped one aspect of the investigation, suspected manipulation of the market via trades. However, the existing allegations of market manipulation by failing to provide accurate information had hardened.
They also said that these two executives’ breach of trust may have put Porsche at risk of collapse. In a statement, the prosecutors' office said that they suspect that former board members took existential risks for the company by doing share price hedging deals in the attempt to take over Volkswagen. [via autonews - sub. required]