Report: Funds sue Porsche for fraud over Volkswagen
By Andrew C., 26 Aug, 2010. 0 Comments
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In Manhattan federal court last Monday, a lawsuit was filed by a group of investment funds against Porsche Automobil Holding SE and two of its former top executives, accusing them of fraud in a "short squeeze" that caused the funds to lose more than $1 billion from Porsche SE's attempted takeover of Volkswagen AG in 2008. The suit alleges that Porsche SE, former CEO Wendelin Wiedeking and former Chief Financial Officer Holger Haerter repeatedly misled investors and lied about Porsche's positions and intentions with respect to VW.
The suit also referred to the U.S.-based funds as victims of what the financial media called "a massive short squeeze" and a "short squeeze of historic proportions." Porsche is accused of securities fraud by manipulating the market. A spokesman for Porsche said the company disputes the validity of the claims, stating that the carmaker has "always abided by current capital markets law.
In 2008, VW shares briefly topped 1,000 euros apiece, making it the world's most valuable company -- in a vicious "short squeeze" triggered when Porsche revealed it controlled about three-quarters of VW's voting stock in October 2008. Porsche dropped its attempt to take over VW as it became deep in debt just as global markets collapsed.
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