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Offline AshSimmonds

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Don't make a hedge fund mad. They don't get over it easily.

Hedge funds are signaling they might sue Porsche (POAHF) over some extraordinary stock manipulation last October that, for a brief while, made Volkswagen (VLKAF) the world's most valuable company.

Here's what happened: Porsche bought a ton of VW shares, causing the price to jump. Hedge funds zeroed in and sold VW shares short, expecting the price to go down. But Porsche surprised everyone by revealing that it owns nearly 43% of the stock and had secretly purchased options for about 32% more.

That left fewer than 6% of VW shares available for trade on the market. The shorts scrambled to buy stock to close their positions, and VW's share price skyrocketed. Germany's DAX index rose 12% as a result.

Lawyers tell the Financial Times that hedge funds and other investors are collecting material for a possible lawsuit against Porsche. But any lawsuit will probably wait until Germany's financial watchdog completes its investigation into whether Porsche manipulated the market.

Porsche was a bit shady here, but as far as I can see it didn't break any laws. In Germany, companies don't have to disclose their holdings until they have a legal right to buy the stock. Porsche took advantage of that disclosure hole.

http://blogs.moneycentral.msn.com/topstocks/archive/2009/03/16/hedge-funds-consider-suing-porsche.aspx



Offline Rat Boy

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Good luck with that... Porsche will win if they do.
Cheers>>Jack

If you're not wasted, the day is.



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