Porsche SE will be required to face a lawsuit claiming that they hit its plan to corner the market in Volkswagen shares. The ruling was made by New York State Supreme Court Justice Charles Edward Ramos. The “core” issue of the claims is whether New York courts can hold a foreign entity responsible for fraudulent misrepresentations aimed at plaintiffs in the state. There are 26 hedge funds involved in this case including Greenlight Capital Inc. and Glenhill Capital LP. Porsche plans to appeal the decision.
The court “rejects Porsche’s characterization of the issues in this action as the manipulation of the German stock market and the trade of German securities,” said Ramos. “New York clearly has a vested interest in such an action.”
The funds had bet that Volkswagen’s stock would fall and claimed that Porsche misled investors by denying that it intended to acquire Volkswagen throughout the year 2008. Supposedly Porsche used manipulative trades to hide their stock positions too. On October 26, 2008, Porsche said that they controlled most of Volkswagen’s common stock, which caused the shares to surge and short-sellers worked on covering their positions.
Porsche said that the court had “assumed the truth of the hedge funds’ allegations without ruling on the merits of their claims.” More to come on this story as it develops. Stay tuned to Pulse2.com.