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Porsche Dodges a Legal Bullet

According to the Wall Street Journal:

Hedge-Fund Lawsuit Dismissed


A U.S. district court judge in New York on Thursday dismissed a lawsuit filed by a group of hedge-fund managers alleging market manipulation in Porsche’s 2008 Volkswagen AG takeover bid.

Judge Harold Baer Jr. ruled that U.S. securities laws didn’t apply in the case because alleged market manipulation occurred outside the United States and isn’t subject to the U.S. Securities Exchange Act. In January, a group of hedge funds filed suit in federal court in Manhattan seeking damages of over $2 billion against Porsche Automobil Holding SE, its former chief executive, Wendelin Wiedeking, and its former chief financial officer, Holger Haerter.

The group of hedge-fund managers—which included Elliott Associates LP, Glenhill Capital LP and Perry Partners LP—felt Porsche misled investors when in October 2008 the company announced that it had access to almost 75% of Volkswagen’s ordinary shares, pushing up the price of the stock as short sellers scrambled to cover their positions.

Robert Giuffra, who represented Porsche in the case, said it was clear that U.S. securities laws wouldn’t apply in this case, which centered on a foreign company trading on a foreign exchange.

“You had a situation where a German company, that is governed by German and EU law engaged in trades in a German stock on a German stock exchange—and the plaintiff hedge funds want to subject that German company to U.S. law,” said Mr. Giuffra, a partner at law firm Sullivan & Cromwell.

A spokeswoman for the hedge funds declined to comment.

In June, the U.S. Supreme Court ruled in an separate case that the U.S. Securities Exchange Act wasn’t meant to apply to foreign stocks traded on foreign exchanges.

Judge Baer, citing that case, wrote in his ruling that he is “loath to create a rule that would make foreign issuers with little relationship to the U.S. subject to suits here simply because a private party in this country entered into a derivatives contract that references the foreign issuer’s stock.”

Write to Steve Eder at

Full Article here:


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