A group of investment funds sued Porsche SE and two of its former top executives on Monday accusing them of fraud in a "short squeeze" that caused the funds to lose more than $1 billion from Porsche's attempted takeover of Volkswagen AG in 2008.
The lawsuit filed in Manhattan federal court alleged that Porsche Automobil Holding SE and former Chief Executive Officer Wendelin Wiedeking and former Vice President of Finance Holger Haerter repeatedly misled investors and lied about Porsche's positions and intentions with respect to VW.
The U.S.-based funds were victims of what the financial media called "a massive short squeeze" and a "short squeeze of historic proportions," the lawsuit alleged. The complaint accused Porsche of securities fraud by manipulating the market.
A spokesman for Porsche in Stuttgart, Germany, said the company disputes the validity of the claims. He said Porsche "always abided by current capital markets law."
VW shares briefly topped 1,000 euros apiece in 2008 -- making Volkswagen the world's most valuable company -- in a vicious "short squeeze" triggered when Porsche revealed it controlled about three-quarters of VW's voting stock in October 2008.
Saddled with debt just as global markets collapsed, Porsche last year abandoned the takeover attempt for its much larger rival and agreed to pursue a merger that is supposed to culminate next year. Wiedeking and Haerter both left the company last year.
State prosecutors in Germany are investigating the role of Wiedeking and Haerter. A probe mandated by the sportscar maker concluded that Wiedeking and Haerter committed no legal transgressions, Porsche said in December.
