Viking Global Investors filed a suit last Friday in the federal court in Manhattan against Porsche SE for its attempted takeover of Volkswagen AG. The New York-based fund claims that what Porsche did was an illegal stock fraud scheme that cost the hedge fund at least $390 million.
This complaint follows a similar suit by US-based short sellers of VW stock who assert that Porsche surreptitiously cornered the market in VW shares in 2008 and later resulted to over $1 billion in losses. According to the suit, Viking took short positions on VW shares armed with the belief that the stock was overpriced.
Viking had relied on Porsche's public assurances in 2008 that it didn't own or intend to acquire a controlling interest in VW.
He said that as early as March 2008, Porsche had been acting to “corner the market in VW shares” in order to secretly take control of VW.
Viking said that Porsche used “careful market manipulation and false statements” to convince investors to believe that the VW shares were overvalued, leading them to enter into short sales of VW shares.
Viking added that because of Porsche's “stranglehold” on the VW shares, about $38.1 billion were lost by short sellers in less than one week and Viking lost at least $390 million in a couple of days. [via autonews - sub. required]