NEW YORK Aug 15 Porsche Automobil Holding SE persuaded a U.S. federal appeals court to uphold the dismissal of a lawsuit by more than 30 hedge funds that accused the German automaker of fraudulently cornering the market in Volkswagen AG shares.
The 2nd U.S. Circuit Court of Appeals on Friday said the defendants could not be held liable under U.S. securities fraud laws because enough of the alleged wrongful conduct took place outside the United States.
It also said, however, that the hedge funds might still "conceivably" be able to show why U.S. laws should apply and returned the case to Manhattan federal court to consider possible amended lawsuits.
The funds accused Porsche of engineering a "massive short squeeze" in October 2008 by quietly buying nearly all freely traded ordinary VW shares in a bid to take over the company, despite publicly stating it had no plans to take a big stake.
VW shares soared after Porsche revealed it had assumed control of three-quarters of the company, caused large losses for hedge funds that had bet VW's share price would decline. (Reporting by Jonathan Stempel in New York, editing by G Crosse)