Funds of David Einhorn’s Greenlight Capital Inc. and Julian Robertson’s Tiger Management LLC are among 18 short sellers of Volkswagen AG stock that joined a fraud lawsuit against Porsche Automobil Holding SE.
The funds were added as plaintiffs in an amended complaint filed today in federal court in New York. The 18 new plaintiff funds bring the total to 35. They accuse Stuttgart, Germany- based Porsche of secretly cornering the market in Volkswagen shares and later causing them more than $2 billion in losses.
The short sellers claim that Porsche misled investors by denying through much of 2008 that it intended to acquire Volkswagen and by using manipulative trades to hide its stock positions. Porsche said on Oct. 26, 2008, that it controlled most of Volkswagen’s common stock, causing the shares to surge as short sellers raced to cover their positions.
“Plaintiffs were forced to cover their short positions at prices that spiraled higher and higher,” according to the amended complaint. “Porsche released billions of euros worth of its VW shares into the short squeeze for its own profit. By releasing some of its own positions, Porsche was able to skim off outrageous and illegal profits while still maintaining the bulk of its position for the takeover of VW.”
Porsche received an expanded complaint and is reviewing the allegations, Albrecht Bamler, a spokesman for Porsche, said in a phone interview. “We will also take action on the expanded complaint,” he said, declining to comment further because it concerns ongoing legal proceedings.
The suit was originally filed Jan. 25.
The case is Elliott Associates LP v. Porsche Automobil Holding SE, 10-cv-532, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Thom Weidlich in New York federal court at firstname.lastname@example.org.