New hedge fund lawsuit filed against Porsche
Greenlight Capital, Tiger Management LLC and other unnamed funds have accused Porsche of fraud, claiming that the high end automaker concealed their plans to buy up Volkswagen Auto Group (VAG) stock in an attempt to corner the market. These investment groups suing Porsche had essentially bet against the VW stock and when Porsche announced their investments in VAG, the hedge funds were out over a billion dollars.
While this type of risk seems like part of the game, the companies suing Porsche believe that they executed their plan to intentionally alter the value of the Volkswagen stock. The suit states that “Porsche lured the plaintiffs into a trap, making plaintiffs believe VW shares were overvalued while hiding from plaintiffs the risk of a massive short squeeze that would send the price skyrocketing several hundred percent”.
This is an almost identical case to the one presented by hedge funds Black Diamond Offshore and Elliot Associates last year, with that case being dismissed in December. The plaintiffs in that case have appealed the dismissal but there has been no further advancement in the original hedge fund case. In the long run, Porsche’s attempt to conduct a stock-based takeover of Volkswagen failed but shortly after, Volkswagen began the proceedings to absorb Porsche into the massive Volkswagen Auto Group.
TorqueNews.com will continue following Porsche’s legal battles since the failed takeover of Volkswagen, bringing you any breaking news when it happens!
Source: Automotive News