A group of investment funds has sued Porsche for two billion euros ($ 2.6 billion) in damages following the failed merger with the Volkswagen AG and allegedly manipulation of the market.
Back in September we reported that plans to merge Porsche into the Volkswagen Group has been delayed due to lawsuits in the US and an investigation by German prosecutors linked to Porsche’s botched effort to buy VW.
Just before 2011 ended, the investment funds filed a lawsuit against Porsche in the district court of the carmakers hometown Stuttgart. The plaintiffs also filed an arbitration application regarding Volkswagen, two members of the VW supervisory board and one member of the management board of VW.
According to a statement issued by the investment funds: “Porsche gained control over the price of VW common stock as it secretly built enormous derivative positions covering almost all of VW’s freely traded shares, then triggered a massive short squeeze, and finally released billions of euros worth of shares into the short squeeze for its own profit.”
In 2009, VW stocks rose from about 210 euros to 1,000 euros after Porsche announced it owned or had positions on 74.1 percent of the stock, making VW the most valuable company in the world. The brief rise — shares quickly fell to 517 euros the next day — squeezed out short-sellers who had been betting on VW shares to fall. These financial speculations resulted in massive losses for the investment funds who argue Porsche had manipulated the market. Some even suggested that Porsche was “a hedge fund with a carmaker attached.”
The spokesman for Porsche, Frank Gaube said: “The accusations are not justified and we reject them.” He also added: “The company needs to receive the suit before it can closely examine it.”
As long as these lawsuits haven’t been settled, a merger between Porsche and VW will be put on hold as these lawsuits are posing enormous risks which also could affect the Wolfsburg based carmaker.
More news will follow, so stay tuned.