A state appeals court has dismissed a lawsuit filed by a group of hedge funds against Porsche Automobil Holding SE (ETR:PAH3) (FRA:PAH3), saying that there was not a New York connection in the case that was strong enough to warrant the state hearing the case.
Porsche Automobil Holding SE (ETR:PAH3) (FRA:PAH3) is handed a victory in connection with a lawsuit filed against it by a group of hedge funds. The suit was dismissed by a state appeals court in New York.
The court decided that the hedge funds which filed the suit did not have the jurisdiction needed to sue Porsche Automobil Holding SE (ETR:PAH3) (FRA:PAH3) in a New York state court. The appeal reversed an earlier ruling that upheld the suit and also mirrors a ruling in federal court that went against the hedge funds two years ago.
The suit was filed in connection with a so-called “short squeeze” when Volkswagen AG (ETR:VOW) (FRA:VOW) and Porsche Automobil Holding SE merged. As we reported, Volkswagen AG (ETR:VOW) (FRA:VOW) finished buying up the rest of Porsche earlier this year. The hedge funds filed the lawsuit following the merger relationship between Porsche and Volkswagen AG (ETR:VOW) (FRA:VOW).
They reportedly were betting that shares of Volkswagen would drop in value, but in 2008 after Porsche released that it held a 75 percent stake in Volkswagen, the company’s stock spiked suddenly. The result was major losses for the hedge funds in question. The managers of the hedge funds then accused Porsche of misleading them and other investors about its stake in Volkswagen.
The hedge funds also filed the same suit against Porsche in Germany, and that litigation is currently pending. As DealBook points out however, Germany’s courts do not hand out large judgments like U.S. courts do. Also Germany’s court system does not involve the use of a jury.