Report: Porsche facing suit over 'stranglehold' on VW shares
#1
10-27-2010, 08:00 AM
Report: Porsche facing suit over 'stranglehold' on VW shares
Filed under: Government/Legal, Porsche, Volkswagen, Earnings/Financials
Porsche spent billions in an effort to purchase as many Volkswagen shares as possible from 2006 to 2008. But eventually the luxury sports car maker's debt became so overwhelming that it was Volkswagen that ended up in position to snap up it's fellow German automaker. On the surface, that's the end of the story, but Viking Global Investors claims that the tale is a lot more complicated. Business Week reports that the New York-based investment company is suing Porsche for misleading investors to "believe that the VW shares were overvalued, inducing them to enter into short sales of VW shares." The fund lost $390 million in just two days, and short-sellers around the world reportedly lost $38 billion in the same time span.
Nearly $400 million is a lot of money, but it's only one of the short seller suits filed against Porsche. Back in January, several short sellers filed suit with similar claims, as the U.S.-based investors lost over $1 billion on VW short sales.
We aren't at all knowledgeable about the rules of short sales and we don't have any lawyers on the staff, but we can tell you that, at the very least, these lawsuits are likely a big-time hassle for Porsche. And if these suits ultimately bear fruit for the plaintiffs, Porsche could be a very costly problem for a car maker already short on cash.
[Source: Business Week]Report: Porsche facing suit over 'stranglehold' on VW shares originally appeared on Autoblog on Wed, 27 Oct 2010 08:00:00 EST. Please see our terms for use of feeds.
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Porsche spent billions in an effort to purchase as many Volkswagen shares as possible from 2006 to 2008. But eventually the luxury sports car maker's debt became so overwhelming that it was Volkswagen that ended up in position to snap up it's fellow German automaker. On the surface, that's the end of the story, but Viking Global Investors claims that the tale is a lot more complicated. Business Week reports that the New York-based investment company is suing Porsche for misleading investors to "believe that the VW shares were overvalued, inducing them to enter into short sales of VW shares." The fund lost $390 million in just two days, and short-sellers around the world reportedly lost $38 billion in the same time span. Nearly $400 million is a lot of money, but it's only one of the short seller suits filed against Porsche. Back in January, several short sellers filed suit with similar claims, as the U.S.-based investors lost over $1 billion on VW short sales.
We aren't at all knowledgeable about the rules of short sales and we don't have any lawyers on the staff, but we can tell you that, at the very least, these lawsuits are likely a big-time hassle for Porsche. And if these suits ultimately bear fruit for the plaintiffs, Porsche could be a very costly problem for a car maker already short on cash.
[Source: Business Week]Report: Porsche facing suit over 'stranglehold' on VW shares originally appeared on Autoblog on Wed, 27 Oct 2010 08:00:00 EST. Please see our terms for use of feeds.
Read | Permalink | Email this | Comments
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