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