Prosecutors Drop Investigation into Porsche SE Board

FRANKFURT—Prosecutors said on Friday that they have dropped an investigation into Porsche Automobil Holding SE's former supervisory board on allegations of market manipulation during its failed attempt to take over Volkswagen AG in 2008.

Porsche SE was set up in 2007 to hold the operating subsidiary of Porsche Group, the sports-car maker Porsche AG. When Porsche SE's takeover bid for Volkswagen failed in 2008, Porsche AG ended up in 100% ownership of Volkswagen. Porsche SE isn't involved in car making. It is owned by the Porsche and Piech families and holds a stake in Volkswagen.

Stuttgart prosecutors had been looking into allegations that Porsche SE's 12-member supervisory board aided and abetted manipulation of the capital markets by not disclosing its true intentions when Porsche SE tried to take over the much-larger Volkswagen in a debt-financed maneuver. The move failed when credit markets dried up during the financial crisis, triggering the departure of the Porsche's top management.

A spokeswoman for the Stuttgart prosecutors confirmed that the office has dropped the investigation. She declined to elaborate further.

Several hedge funds have claimed that they suffered substantial losses and have sued Porsche SE for allegedly cornering the market in Volkswagen stock in 2008. By ending the probe, the public prosecutors prove that the allegations are "without merit," Porsche SE said.

Separately, Porsche's former chief executive, Wendelin Wiedeking, and former finance chief, Holger Hä rter, are to stand trial in Stuttgart in October.

"We welcome the public prosecutor's decision and are optimistic that the allegation of market manipulation against the former members of the executive board will also prove to be without merit in the pending main hearing," said Porsche SE supervisory board Chairman Wolfgang Porsche, referring to the October trial.

Ilka Kopplin contributed to this article.

Write to Ulrike Dauer at [e-mail]

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