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Hedge funds escalate lawsuit against Porsche

February 3, 2014

Reuters Frankfurt

Investors including the US hedge fund Elliott Associates have escalated a legal battle against members of Porsche's board by seeking euros 1.8bn (pounds 1.5bn) in damages from Wolfgang Porsche and his cousin Ferdinand Piech for alleged market manipulation. The lawsuit forms part of a legal campaign being waged by hedge funds in various courts across the world, seeking to recoup money lost by betting on a fall in Volkswagen's share price in 2008. Porsche described the most recent lawsuit, which was lodged at a Frankfurt regional court, as unfounded. Ferdinand Piech and Wolfgang Porsche were not immediately available for comment. A spokesman for Elliott Associates declined to comment. "Porsche SE and its supervisory board members will defend themselves with all available legal means," Porsche said, adding that the lawsuit in Frankfurt was no different to a separate lawsuit already pending in Hanover . The funds accuse Porsche of creating a huge short squeeze in 2008 by quietly buying nearly all freely traded VW shares in a bid to take over the firm. Porsche's attempt to buy up the larger VW ultimately failed, but hedge funds are still suing the Stuttgart -based company and its managers for alleged market manipulation. Porsche denies the allegations. Piech and Porsche are both members of the clan that owns Porsche SE, and hedge funds argue that as supervisory board members, they were informed about moves to buy up a VW stake. Piech was chief executive of VW before becoming chairman of its supervisory board. In March 2008 , Porsche SE dismissed as "speculation" talk that it intended to take over VW. Seven months later Porsche SE revealed it held 42.6% of VW's common shares as well as controlling another 31.5% via financial instruments. Captions: Porsches on sale in the US. The carmaker faces several suits accusing it of market manipulation Photograph: Joe Raedle / Getty

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Source: Guardian (UK)

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