Porsche 2011 Annual Report Download - page 103

Litigation risks
Porsche SE and the entities in which it holds
a direct or indirect investment are involved in legal
disputes and administrative proceedings both nation-
ally and internationally within the framework of their
operating activities. Where such risks are foreseeable,
adequate provisions are created in order to account
for any ensuing risks. The company does not believe,
therefore, that these risks will have a sustained effect
on the economic position of the group. However, due
to the fact that some risks cannot be estimated, or
only to a limited degree, it cannot be ruled out that
very serious losses may eventuate that are not cov-
ered by the provisions already created.
To the knowledge of Porsche SE – which is
not a party to the investigations and therefore has
only limited knowledge of the subject matter and
status of investigations – the Stuttgart public prose-
cutor has initiated investigations against the former
members of the executive board Dr. Wendelin Wiede-
king and Holger P. Härter in connection with allega-
tions of information-based manipulation of the market
in Volkswagen shares. According to the public prose-
cutor, the allegations involve public statements made
by representatives of Porsche SE and the failure to
make certain required statements regarding the ac-
quisition of the shareholding in Volkswagen AG be-
tween 2006 and 2009. In addition, the public prose-
cutor is investigating the two former members of the
executive board in connection with allegations of
breach of fiduciary duty to the detriment of Porsche
SE. According to the public prosecutor, there is rea-
son to suspect that the two former members of the
executive board may have taken risks jeopardizing the
company’s ability to continue as a going concern by
entering into share price hedging transactions in the
course of acquiring the shareholding in Volkswagen
AG. Furthermore, the public prosecutor has launched
investigations against Holger P. Härter and two em-
ployees of Porsche SE on suspicion of obtaining
credit by deception in connection with a loan that has
already been repaid. The Stuttgart public prosecutor
announced in February 2011 that the investigations
would take longer than anticipated and are not ex-
pected to be concluded before the start of 2012. The
Stuttgart public prosecutor has to date not issued a
statement on the current status of proceedings.
Porsche SE considers the allegations made to be
without merit.
In 2010, 46 plaintiffs filed six actions for da-
mages against Porsche SE in the United States Dis-
trict Court for the Southern District of New York. The
plaintiffs alleged damages of more than USD 2.5
billion. In three of the six actions, the former mem-
bers of the executive board Dr. Wendelin Wiedeking
and Holger P. Härter are also named as defendants.
Plaintiffs alleged in their complaints that, in connec-
tion with its acquisition of a stake in Volkswagen AG
during the year 2008, Porsche SE issued false and
misleading statements and engaged in market ma-
nipulation in violation of the US Securities Exchange
Act as well as in common law fraud. Porsche SE
considers the complaints to be without merit and filed
a motion to dismiss. On 30 December 2010, the US
court granted the motion to dismiss the complaints in
their entirety. Thirty-two of the original 46 plaintiffs
have appealed this decision with the United States
Court of Appeals for the Second Circuit.
Moreover, on 18 February 2011, three of the
plaintiffs, and on 15 March 2011 a further 23 of the
plaintiffs, filed two actions in New York state court. In
their complaints, they assert claims for common law
fraud and unjust enrichment on the basis of allega-
tions similar to those made in their complaints in the
actions referred to above. The plaintiffs claim to have
lost at least USD 1.4 billion. Porsche SE considers
these actions to be legally insufficient and without
merit.
In 2009 and 2010, institutional investors in
Germany applied for conciliatory proceedings against
Porsche SE with regard to the assertion of claims for
damages on the basis of alleged breaches of statu-
tory capital market regulations in connection with the
acquisition of a shareholding in Volkswagen AG. Vari-
ous investors have filed further applications for con-
ciliatory proceedings against Porsche SE based on
the same claims; the company received these appli-
cations in April, August and December 2011 and in
January and February 2012. Some of the new appli-
cations are also directed against Volkswagen AG. All
of the alleged claims relate to alleged lost profits or
103
2