Porsche Accused of Insider Trading on VW Stock

by Bertel Schmitt

Published: October 29th, 2008

porsche accused of insider trading on vw stock

Reacting to happier talk around the world, every stock on Germany’s DAX closed higher today. All stock but one: Volkswagen. After blowing through the rafters yesterday, the VeeDub share price boomeranged. Result: This morning, the DAX was in the tank by more than 7 percent. All other shares rose and did shine, but Volkswagen single-handedly brought the whole ship down. The Deutsche Börse, Germany’s stock exchange, is exasperated by Volkswagen’s wild gyrations. The Deutsche Börse is mad as hell and won’t take it anymore. As of this coming week, the VeeDub share will only make up 10 percent of the DAX, Germany’s equivalent of the Dow Jones, the Deutsche Börse decreed. Yesterday, VW represented 27 percent of Germany’s most watched index. The Euro Stoxx 50 will also reduce the weight of Wolfsburg’s shares. The German government loosed its dogs of watch to follow a trail of insider trading and market manipulation.

On Sunday, Porsche announced the jaw-dropping news that not only had Porsche increased their holdings to 42.6 percent of Volkswagen, they also had acquired options for another 31.5 percent. That made the stock shoot up faster than a heroin junkie. This morning, says DPA, Porsche cashed in some of their VW options, at a tidy profit. And the stock dropped like Wile E. Coyote when he’s suddenly realized he’s got nothing underneath him but air. VW opened at €510, went as low as €495.91. At 5:41 in the evening the stock was at €519, down €400.50 or 44 percent from the day before. The stock wasn’t the only thing that dropped. Shoes did follow.

Today, more and more analysts agree with TTAC’s opinion of yesterday that the money for buying Volkswagen may not come from pushing overpriced Porsche extras alone. “We think Porsche is foremost interested in large profits from the options trade,” Frank Biller, analyst at the Landesbank Baden-Württemberg, claimed. “As the stock will go down, they can finance the takeover without outside capital.” Klaus Kaldemorgen, Chief of Germany’s largest investment fond DWS, said how he really felt: “Irresponsible: Porsche is manipulating the VW stock.” Germany’s Bundesanstalt für Finanzdienstleistungsaufsicht, not quite the equivalent of the SEC, but close, dropped a hint via a spokeswoman: “We are monitoring the trade with VW shares for indications of insider trading and market manipulation.” Watch this space.

Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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2 of 11 comments

Landcrusher on Oct 30, 2008

Ah, now I can't see why I didn't figure that out. Thanks, Bertel.

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Bertel Schmitt on Oct 30, 2008

The Chinese press (remember, VW started the kar kraze here in 1984 with the joint venture with SAIC) is full with headlines about Germany's government drawing a bead on VW/Porsche.

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