The Stuttgart regional court in Germany ruled (in two separate lawsuits: 22 O 101/16 & 22 O 348/16) Wednesday that Porsche Automobil Holding SE (Porsche) must compensate shareholders for failing to disclose information regarding its investment, Volkswagen (VW), and VW’s emissions scandal.
Shareholders of Porsche sued the company for violating §37b of the Securities Trading Act that makes a corporation, as issuer of financial instruments, liable to a third party (in this case, the shareholders) when the corporation does not disclose inside information directly affecting the company to the third party that is damaged as a result of this failure to disclose. The shareholders claimed that due to VW’s installation of the defeat devices in diesel vehicles that allowed the vehicles to deceive laboratory emissions tests without notification to the shareholders, resulting in fines to Volkswagen in Germany and abroad, Porsche is liable.
The court agreed with the shareholders, ordering compensation for stock purchased between May 23, 2014 and September 22, 2015. The verdict is not final as Porsche will have the opportunity to appeal.