Porsche Faces $1bn Lawsuit Over VW 'Lies'
2:00pm UK, Tuesday January 26, 2010
Luxury carmaker Porsche and two of its former top executives are being sued for $1bn (£620m) over accusations they lied about their intention to take over Volkswagen.
Fund managers say they lost cash covering short positions at artificially high prices
A group of US hedge fund managers claim they lost more than that sum when they were short-selling VW stock in 2008.
That month, Porsche surprised the stock market when it revealed it had built up a 75% stake in its fellow German manufacturer.
The disclosure sent VW shares rocketing and made it, very briefly, the world's most valuable company.
The lawsuit filed in Manhattan federal court alleged that Porsche, together with former chief executive Wendelin Wiedeking and former vice president of finance Holger Haerter, misled investors.
The fund managers claim the group repeatedly lied about the kind of investment they were making in VW.
The complaint accused Porsche of securities fraud by manipulating the market.
The lawsuit alleged: "Specifically, Porsche cornered the market in VW shares with false denials of its intent to take over VW and by engaging in a series of manipulative derivatives trades to hide the extent to which Porsche controlled VW shares."
A spokesman for Porsche in Stuttgart said the company disputed the validity of the claims.
He said Porsche "always abided by current capital markets law".
Deep in debt and hit hard by the downturn, Porsche last year abandoned the takeover attempt for its much larger rival and agreed to pursue a merger that is supposed to culminate next year.
An investigation ordered by the sportscar firm concluded that neither Mr Wiedeking nor Mr Haerter, both of whom left last year, committed any legal transgressions.
But state prosecutors in Germany are still investigating their role in the failed takeover.