The Financial Times reports from Stuttgart, where the regional court in the Porsche Volkswagen shares trial has just decided that Wendelin Wiedeking and Holger Härter will not face trial on charges of market manipulation in Porsche’s attempted Volkswagen takeover.
The news will be welcome at Porsche, which has seen a number of potential lawsuits stemming from the VW shares debacle evaporate in the last few weeks. While Porsche SE still holds 51% of Volkswagen shares, the car maker is now owned by Volkswagen.
Confused? You’re not alone. No one will emerge a winner in this lawsuit, which stems from hedge fund accusations of unfair conduct in Porsche’s secrecy over its takeover plans. Stock market players did not line their pockets, but instead lost an estimated €30 billion.
In 2013, former Porsche CFO Härter (left) was found guilty of credit fraud and fined as a result. With Wiedeking earning £57.6 million in 2007 and arch-trader Härter likely not far behind, maybe a fine is just fine versus prison.
About the Porsche Volkswagen Shares Trial:
In 2008, Porsche AG began buying up VW shares, publicly denying that it planned to take over Volkswagen by accumulating a 75 percent stake in the company. When the full extent of Porsche’s position in VW was revealed to the markets later that year, hedge fund and investment bank traders, who had been gambling on a fall in Volkswagen share prices given the effect of the credit crunch on the rest of the automotive industry were forced to sell their ‘short’ VW stock at the new higher share prices, which cost them an estimated $30 billion.
Porsche’s delight was shortlived, however. Financing the cash purchase of more than 30% of Volkswagen shares landed the carmaker with a mountain of debt that ultimately could not be serviced. Porsche sailed close to bankruptcy through early 2009, when banks closed off its line of credit. Despite securing extended terms from German owned banks and selling part of the business to Gulf investors, the previously independent Porsche car company was absorbed by Volkswagen in 2012.