A New York state appellate court dismissed a lawsuit against
Porsche Automobil Holding SE Thursday on jurisdictional grounds,
finding the case filed by hedge funds over $1 billion in
short-squeeze losses didn't have "a substantial nexus with New
York."
The 26 funds, including Viking Global Equities LP and Glenhill
Capital LP, claimed they were misled and defrauded by Porsche in
2008 over its intent to amass a large stake in Volkswagen AG. The
hedge funds are seeking total damages of $1.4 billion, according to
a notice filed by Porsche with European stock exchanges late
Thursday.
The funds took a large short position in Volkswagen shares on
the belief that Porsche had no intention to raise its stake in the
company to 75%, but suffered steep losses when Porsche announced
plans to do so, causing Volkswagen's share price to skyrocket and
creating steep losses for the funds trying to cover the short
position.
The New York appellate court division for Manhattan found the
only connections to the case in New York were phone calls and
e-mails between the funds and Porsche, while Volkswagen stock is
only traded on foreign exchanges and witnesses and documents are
located in Germany. "Porsche met its heavy burden to establish that
New York was an inconvenient forum," the opinion said.
The decision overturned an earlier trial court ruling allowing
the case to remain active in the New York courts. The hedge funds
have 30 days to appeal the ruling.
Write to Christian Berthelsen at
christian.berthelsen@dowjones.com
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