Thursday, December 27th, Porsche won the dismissal of the lawsuit filed by 26 hedge funds which accused the automaker of causing loses of more than $1 billion.
According to the lawsuit, filed by hedge funds including Glenhill Capital LP, David Einhorn’s Greenlight Capital LP and Chase Coleman’s Tiger Global LP proceed, Porsche has engineered a ‘massive short squeeze’ back in October 2008 by secretly buying almost all VW freely traded ordinary shares in an attempt to take over the entire company, although it publicly stated that this was not the plan.
But the moment Porsche announced it had purchased almost three-quarters of VW, shares of the German automaker immediately soared, making VW the world’s biggest company by market value. This quick increase made the hedge funds lose a lot of money after betting on a decline in the stock price. Although the 2010 case Morrison vs. National Australia Bank Ltd made the U.S. Supreme Court make it difficult to bring such cases to federal courts, the hedge funds still took their chance.
“The appeals court squarely rejected the plaintiffs’ attempt to end-run Morrison by suing in a state court,” Robert Giuffra, a partner at Sullivan & Cromwell representing Porsche, said in a phone interview.
According to the New York appeals court the hedge funds were not able to prove that Porsche’s move to buy VW has caused a ’substantial nexus’ with New York and that the case was more appropriate for Germany, since the majority of parties included in the case are not New York residents.
“Porsche met its heavy burden to establish that New York was an inconvenient forum,” the court said.
by Ana Cezara Savin
) - Friday, December 28th, 2012 - filed under News
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