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Volkswagen May Face German Lawsuit Over Short-Squeeze

April 30, 2011
2 min to read


FRANKFURT - Volkswagen shrugged off a report on Saturday of a lawsuit against it by investment funds that accuse the carmaker of causing high losses by manipulating markets in 2008.


Business weekly WirtschaftsWoche reported that law firm CLLB is preparing a complaint by German investment funds against Volkswagen, and is likely to file a suit with the German regional court of Brunswick in September, reported Automotive News.

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A Volkswagen spokesman said on Saturday the company had not seen a copy of the complaint, adding: "The allegations we know of so far -- of CLLB against Volkswagen -- are completely unsubstantiated."


The suit would be the first filed against Volkswagen in Germany relating to claims by investors they suffered billions in losses when Porsche effectively cornered the market in tradeable Volkswagen ordinary shares in 2008.


Porsche has already been the subject of lawsuits in Germany and the United States, which have so far failed, alleging it quietly bought up the shares as part of a plan to take over Volkswagen while saying publicly it had no plans to do so.


When Porsche revealed its holdings in October 2008, shares of Volkswagen soared, briefly making the company the world's biggest by market value. This caused losses for funds that had bet on a decline in the stock price.


The takeover attempt backfired leaving Porsche saddled with debt, and meant that Porsche had to turn to Volkswagen for help. Volkswagen hopes to fold the sports car maker into its operations this year, but the lawsuits are a major obstacle for the planned merger.

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WirtschaftsWoche reported the new complaint being prepared by CLLB will allege that members of Volkswagen's supervisory board were aware of Porsche's market manipulation and did not make that information public immediately.


The plaintiffs may ask for nearly 3 billion euros in damages, and U.S. based funds -- which are already suing Porsche for an additional 2 billion euros in damages -- could join the German funds in the lawsuit, the magazine reported.

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