New York: Porsche Automobil Holding SE persuaded a judge to dismiss two lawsuits claiming the carmaker cost hedge funds more than $2 billion (Dh7.34 billion) by misleading short-sellers in its acquisition of Volkswagen AG shares in 2008.
US District Judge Harold Baer in Manhattan on Thursday dismissed the complaints filed by hedge funds Elliott Associates LP and Black Diamond Offshore and representing a total of 39 US and foreign-based funds. The suits accused Stuttgart, Germany-based Porsche of secretly cornering the market in Volkswagen shares.
The short sellers claimed that Porsche misled investors by denying through much of 2008 that it intended to acquire Volkswagen and by using manipulative trades to hide its stock positions.
Surge in shares
Porsche said on October 26, 2008, that it controlled most of Volkswagen's common stock, causing the shares to surge as short sellers raced to cover their positions.
In his opinion, Baer said he relied on a recent US Supreme Court ruling that fraud claims such as those in the suits against Porsche apply only to securities listed on domestic exchanges and domestic transactions in other securities. Baer said his ruling Thursday applies to other similar complaints against Porsche.
The swaps at issue in the case "were the functional equivalent of trading the underlying VW shares on a German exchange," Baer wrote.
"Accordingly, the econ-omic reality is that plaintiffs' swap agreements are essentially transactions conducted upon foreign exchanges and markets and not domestic transactions."
