Securities Fraud and Manipulation Lawsuit Against Porsche SE Expands to More Than $2 Billion in Losses

18 Investment Funds Join Litigation, Amended Complaint Filed

NEW YORK, April 29 -- Eighteen investment funds today joined the lawsuit against Porsche Automobil Holding SE ("Porsche SE") and two of its former executives, Wendelin Wiedeking and Holger Haerter, asserting fraud and securities manipulation in relation to Porsche SE's failed 2008 attempt to take over Volkswagen AG ("VW"). With the addition of the new plaintiffs, the funds -- now 35 in number -- seek to recover more than $2 billion dollars in losses suffered after Porsche SE triggered what The New York Times called "a short squeeze of historic proportions."

The Amended Complaint, filed this morning in Manhattan federal court, explains in greater detail how Porsche SE manipulated the price of VW stock as it secretly cornered the market in VW shares. According to the Amended Complaint, Porsche SE hid that it was cornering the market in VW's freely traded shares by repeatedly issuing misleading statements about its activities and by spreading purchases of call options around to several counterparties to avoid detection of its increasing control. The scheme induced the plaintiff funds to establish short positions on VW stock. When Porsche SE suddenly revealed the extent of its true control of VW shares on October 26, 2008, a massive short squeeze ensued. The price of VW shares skyrocketed several hundred percent, briefly topping 1,000 Euros. Investors who had shorted VW lost billions covering their positions in the squeeze. Porsche SE collected outrageous profits at the expense of plaintiffs and others by releasing some of its shares into the market at artificial prices.

Today's filing reveals previously unknown details of Porsche SE's plan. The new allegations include that:

  --  Less than a week before Porsche SE revealed the truth -- that it had
      amassed control of more than 74 percent of VW's shares -- it conducted
      phone calls with investment advisors in New York during which Porsche
      SE sought to reassure the New York-based investment advisors that it
      was nowhere near 75 percent control. Among the false statements
      Porsche SE made was that although it would acquire a simple majority
      of VW shares, "going to 75% is not on the agenda." Porsche SE told
      another fund that it would stop acquiring shares after achieving
      50-55% control.
  --  Porsche SE admitted to at least one plaintiff that it was spreading
      its options trades around to multiple counterparties to avoid
      detection.
  --  Porsche SE's fraudulent strategy deliberately targeted short sellers.
      In order to secretly obtain 75 percent ownership in VW, Porsche needed
      short sellers to borrow stock from owners who would not or could not
      sell the stock themselves and then to sell it to Porsche or Porsche's
      call-option counterparties. Without the additional supply created by
      short sellers, Porsche could never have gained control of 75 percent.
  --  Porsche SE financed its call-option strategy in part through selling
      put options. As the price of VW declined in the third week of October
      2008, Porsche SE's liability on the puts it had sold threatened to
      force the company into bankruptcy. It avoided this threat by forcing
      the price of VW up, which it accomplished by announcing its
      call-option position on October 26, triggering the squeeze.

The case is pending in the Southern District of New York, where it is captioned as Elliott Associates, L.P., et al, v. Porsche Automobil Holding SE, et al, No. 10-civ-532 (HB)(THK).

The funds are represented by Bartlit Beck Herman Palenchar & Scott LLP (see www.bartlit-beck.com) and Kleinberg, Kaplan, Wolf & Cohen, P.C. (www.kkwc.com).