Porsche wins dismissal of hedge fund lawsuit over VW

Journalists attend the annual news conference of the Porsche Automobil Holding SE in Stuttgart March 15, 2012.

Credit: Reuters/Alex Domanski

By Jonathan Stempel

NEW YORK | Thu Dec 27, 2012 1:17pm EST

NEW YORK (Reuters) - Porsche Automobil Holding SE (PSHG_p.DE) on Thursday won the dismissal of a New York lawsuit by 26 hedge funds that accused the German automaker of causing more than $1 billion of losses by cornering the market in Volkswagen AG (VOWG_p.DE) shares.

A five-justice panel of the New York State appeals court in Manhattan unanimously found that Porsche had met its "heavy burden" to establish that the state was the wrong place in which to bring the lawsuit.

The hedge funds accused Porsche of engineering a "massive short squeeze" in October 2008 by quietly buying nearly all of Volkswagen's freely traded ordinary shares in a bid to take over the company, despite publicly stating it had no plans to do so.

When Porsche revealed its holdings, shares of VW soared, briefly making that German company the world's biggest by market value, and causing losses for hedge funds that had bet on a decline in the stock price.

Robert Giuffra, a lawyer for Porsche, in an email called Thursday's decision an "important victory."

James Heaton, a lawyer for the hedge funds, had no immediate comment.

Last week, prosecutors in Porsche's hometown of Stuttgart announced market manipulation charges against former Porsche Chief Executive Wendelin Wiedeking and former Chief Financial Officer Holger Haerter tied to the VW share purchases. The defendants' lawyers denied any wrongdoing by their clients.

The cases are Glenhill Capital LP et al v. Porsche Automobil Holding SE, New York State Supreme Court, Appellate division, No. 8895; and Viking Global Equities LP et al v. Porsche Automobil Holding SE in the same court, No. M-5519. (Editing by Maureen Bavdek and Leslie Gevirtz)

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Former Porsche CEO charged with market manipulation

Former CEO of German car manufacturer Porsche, Wendelin Wiedeking at the Porsche headquarters in Stuttgart, in this file photo taken July 23, 2009.

Credit: Reuters/Kai Pfaffenbach

STUTTGART | Wed Dec 19, 2012 5:47am EST

STUTTGART (Reuters) - Stuttgart prosecutors have charged former Porsche SE (PSHG_p.DE) chief executive Wendelin Wiedeking and his former finance chief with market manipulation of Volkswagen (VOWG_p.DE) shares.

The prosecutor's office in Stuttgart, where Porsche is based, said on Wednesday the executives made false public statements during the sportscar maker's botched 2008-09 takeover of VW.

Wiedeking, hailed as "the man who outfoxed the market" by Fortune Magazine in January 2009, and Haerter could face a sentence of up to five years if they were found guilty of breaching securities trading laws, a criminal offence, prosecutors have said in the past.

Investors have said Porsche's former top management had been pursuing plans to take over much larger carmaker VW while making public statements to the contrary.

In March 2008, Porsche dismissed as "speculation" media reports it intended to take over VW, which builds more cars in a week than Porsche does in a year.

Seven months later, Porsche disclosed it had options giving it control of almost three quarters of VW, sending its shares higher and forcing short-sellers to race to buy back stock they had borrowed betting that VW shares would drop.

The historic short squeeze pushed VW shares above 1,000 euros each within days, briefly making the Wolfsburg-based carmaker the world's most valuable company and triggering accusations of market manipulation.

"The investigation has shown that the defendants decided in February 2008, at the latest, to increase Porsche's holding in Volkswagen AG to 75 percent of voting capital in the first quarter of 2009," the prosecutor's office said on Wednesday.

(Reporting by Hendrik Sackmann and Maria Sheahan; Editing by Dan Lalor)

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