Porsche SE wants New York appeals court to overturn August ruling

Article by Anita Panait, on November 30, 2012

Porsche SE asked the New York State Supreme Court's Appellate Division in Manhattan to reverse a ruling that the carmaker should face a lawsuit by hedge funds accusing it of concealing plans to corner the market in Volkswagen shares. In August 2012, Justice Charles Ramos rejected Porsche’s motion to dismiss the 2011 lawsuit filed by 26 hedge funds including David Einhorn's Greenlight Capital Inc.

The funds, which made a bet that Volkswagen stocks would suffer a drop, accused Porsche of misleading investors by denying through much of 2008 that it has plans to acquire Volkswagen. The funds said that Porsche also misled investors by using manipulative trades to hide its stock positions.

Robert Giuffra, an attorney for Porsche, has told the appellate panel that the lawsuits don't belong in New York since "Germany has a far greater connection to the issues in this case than does the United States and New York."

Some of the plaintiffs have also filed cases against Porsche in Germany. In a court filing in August, lawyers for Porsche said that the lawsuits challenge disclosures made in Germany by Porsche about its “accumulation of shares of another German company traded in Germany.”

On Oct. 26, 2008, Porsche disclosed that it controlled around 74.1 percent of Volkswagen's common stock, partly through options, and was looking forward to a possible takeover. Porsche’s disclosures triggered the shares to rise as short-sellers raced to cover their positions.

Investors in Germany and the US have claimed that Porsche lied about its intentions to take over Volkswagen. Porsche’s failed takeover bid eventually led the carmaker to agree to divest its sports-car business to Volkswagen as its debt increased. The parties completed the sale on Aug. 1, 2012, with VW acquiring the remaining shares for EUR4.5 billion ($5.8 billion).

Topics: porsche

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