Porsche in legal trouble stemming from their failed takeover of VW - $3.2 billion lawsuit
Most of you should know that Porsche attempted to takeover Volkswagen and failed in its attempt to do so. The attempt backfired when the global economic crisis hit and VW ended up swallowing up Porsche. So, what is the problem? Well, investors in Porsche lost approximately $3.2 billion in the failed takeover attempt. Turns out, they want that money back. A lawsuit was filed in Stuttgart alleging that Porsche gained control of VW stock building large derivative positions secretly which could cover all of VW's traded shares. Porsche then supposedly released the shares they controlled worth billions of Euros.
What does this mean in normal speak? Porsche controlled the stock and inflated the price artificially generating tons of money. Porsche revealed its control of 74% of VW stock on October 26, 2008. Porsche apparently used the $3.2 billion from investors to buy up stock, then let it go creating a frenzy upping the price for short term gain, and created huge losses for the hedge fund investors in Porsche who were betting the VW stock would dip, not rise.
VW wants to see if Porsche is liable for billions in this lawsuit and who can blame them. We will keep you updated on what happens.