HF sued Porsche for $1 billion

Discussion in 'Wall St. News' started by turkeyneck, Jan 27, 2010.

  1. American hedge fund managers are suing Porsche for more than $1 billion (£620 million).

    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 per cent 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 behaviour of Wendelin Wiedeking, its former chief executive, and Holger Harter, its former vice-president of finance, and found no wrong-doing.

  2. lol. morons.

    Got their balls cut off for naked short selling. Why is this even in court? needs to be thrown out.
  3. mujoh


    Rediculous that these fund managers want to make sure that the rule of law is upheld where in reality they are the ones who wanted Porsche to break the law by giving them insider information. But it is so easy to blame others for their own mistakes...
  4. Why don't they just ask for a bailout from the Fed?