U.S. Court dismisses hedge-fund lawsuit against Porsche

Article by Christian Andrei, on January 3, 2011

U.S. District Judge Harold Baer in Manhattan dismissed two lawsuits that claimed that Porsche Automobil Holding SE cost hedge funds over $2 billion by deceiving short-sellers in acquiring Volkswagen AG shares in 2008.

The ruling had scrapped the complaints filed by hedge funds Elliott Associates LP and Black Diamond Offshore who represented 39 U.S. and foreign-based funds.

The suits had claimed that Porsche secretly cornered the market in Volkswagen shares. The short-sellers asserted that Porsche misled investors by denying through much of 2008 that it aimed to acquire Volkswagen and by using manipulative trades to hide its stock positions.

On Oct. 26, 2008, Porsche stated that it controlled most of Volkswagen's common stock, resulting to the surging of shares as short-sellers were competing to cover their positions.

Judge Baer said that he depended on a recent U.S. Supreme Court ruling that fraud claims, including the suits against Porsche, apply only to securities listed on domestic exchanges and domestic transactions in other securities.

Baer said that this ruling also applies to other similar complaints against Porsche. Judge Baer wrote that the swaps at issue in the case “were the functional equivalent of trading the underlying VW shares on a German exchange.”

He also stated that the “economic reality” is that plaintiffs' swap agreements are basically transactions that are used on foreign exchanges and markets and not on domestic transactions. [via autonews - sub. required]

Topics: porsche, lawsuit

If you liked the article, share on:


Login or Create new account to add a comment!


Starting early 2017, the new Audi Q7 will be available with the new 2.0-liter TFSI four-cylinder engine that makes it not only faster but also lighter and more efficient than...
by - October 25, 2016
Soon, Fiat Chrysler’s Dodge brand will be ending the production of the Dodge Viper. So practically, the 2017 Dodge Viper will be the last Viper up for grabs. Gerry Wood...
by - October 25, 2016
Say hello to the fastest accelerating production car in the world: the new 2017 Tesla Model S P100D. Powered by a 100 kWh battery, this new model basically outruns almost...
by - October 25, 2016
Ever heard of the “Lynk & Co” automotive brand? Well, it is highly likely people haven’t. This is practically because this is new brand created by the joint venture between...
by - October 25, 2016
Mitsubishi is now officially part of the Renault-Nissan alliance after Nissan took over the Japanese car company recently. We know a lot has been happening in the car industry, but...
by - October 24, 2016