American hedge fund managers are suing Porsche for more than $1 billion. Four fund managers – Elliott Associates, Glenhill Capital Management, Glenview Capital Management and Perry Capital – are accusing Porsche, its former chief executive and its former chief financial officer of repeatedly lying about their intention to take over Volkswagen.
The fund managers claim they lost more than $1 billion because they were shorting VW stock – a process of selling borrowed shares in the hope of buying them back more cheaply at a later date and pocketing the difference – in October 2008 when Porsche surprised the stock market by revealing a 75 percent stake in VW.
Porsche's announcement sent VW's shares rocketing, and as the short sellers scrambled to buy back stock, that drove prices even higher. The American funds lost more than $1 billion when forced to buy VW shares at the inflated price in order to meet their obligations to return the shares they had borrowed. Porsche profited from the squeeze by selling some of its secretly acquired stock.
Phil Beck, the funds' attorney, said: “Porsche should be held accountable in a court of law. We'll do whatever it takes to make sure that the rule of law is upheld."
Reports also suggest that other VW investors may join the lawsuit, boosting claims to as much as $10 billion.
A Porsche spokesman said the company rejected the claim, adding that Porsche had “always abided by current capital markets law.”
Porsche has already investigated the behavior of Wendelin Wiedeking, its former chief executive, and Holger Harter, its former vice president of finance, and says it found no wrongdoing.Source: Autocar