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unhappycamper

(60,364 posts)
Thu Oct 22, 2015, 08:32 AM Oct 2015

Ex-Porsche chief on trial for role in failed VW takeover

http://www.dw.com/en/ex-porsche-chief-on-trial-for-role-in-failed-vw-takeover/a-18798971

Two former top executives at sports car maker Porsche, including ex-CEO Wendelin Wiedeking, have gone on trial for alleged market manipulation in one of the biggest cases in German corporate history.

Ex-Porsche chief on trial for role in failed VW takeover
2.10.2015

Shortly before the trial opened in the Stuttgart district court on Thursday, ex-Porsche chief Wendelin Wiedeking again denied the charges, saying he was "not guilty" of market manipulation in connection with his failed bid to takeover bigger rival Volkswagen Group in 2008.

Prosecutors claim Wiedeking and his former finance chief Holger Härter failed to adequately inform investors and regulators about their plans - a charge that could bring the pair a hefty fine or even jail sentences of up to five years.

David vs. Goliath

October 26, 2008 was a particularly bad day for 35 American hedge funds because German sports carmaker Porsche announced that it owned 42.6 percent of Volkswagen's common stock and had acquired options for another 31.5 percent that would bring its total stake in the company to 74.1 percent. The announcement then declared Porsche was seeking to obtain 75 percent of VW shares, resulting in a frenzy of trading activity.

Hedge fund managers had long been betting that the price of VW stock would fall. The financial crisis caused demand for cars to fall in the US, driving down American automakers' share prices. They figured it was only a matter of time until German carmakers suffered a similar fate. As a result, their funds were borrowing VW shares and selling them on in the hope they could buy them back later at a lower price - a speculative strategy known as "short selling."
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