Some US funds drop action against Porsche: court document

22nd July 2010, Comments 0 comments

Several US investment funds have dropped complaints against German luxury sports car maker Porsche for stock market manipulation, according to a document seen by AFP on Thursday.

Of 41 plaintiffs, six funds have decided not to pursue legal action against Porsche, a document issued by the New York Southern District Court showed, a move that could lift an obstacle to Volkswagen's takeover of Porsche.

The German automaker declined to comment when contacted by AFP.

In a separate decision in late June, the US Supreme Court said investors which bought shares of foreign companies outside the United States could not have recourse to the US judicial system.

The New York court is to decide in the coming months if it will hear the case involving Porsche, however.

US investment funds filed complaints against Porsche this year, saying the carmaker had lied about its intention to take over Volkswagen and had thus manipulated the stock market.

The funds were demanding two billion dollars in damages and interest.

Porsche caught investors by surprise in October 2008 when it said it owned 75 percent of VW, the biggest European carmaker.

The announcement sent VW's share price to more than 1,000 (1,290 dollars) euros per share and briefly make the group the world's biggest company by market capitalisation.

Speculators that had bet VW shares would fall were forced to cover their positions at great cost.

But Porsche was caught out by the global economic crisis and ended up abandoning its bid for VW, which turned the tables last year and bought nearly half of Porsche's equity. VW plans to acquire the rest by 2011.

On Thursday, VW shares showed a gain of 4.09 percent at 78.55 euros on the Frankfurt stock exchange, while the DAX index of leading shares was 2.53 percent higher overall.

Porsche shares showed a gain of 6.50 percent to 37.36 euros.

© 2010 AFP

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