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Scandal revs up at Porsche, VW

2006-11-20 08:28
Frankfurt - German prosecutors are examining suspicions of insider trading linked to Porsche AG's 2005 purchase of shares in rival Volkswagen AG, a prosecutor said on Sunday.

Germany's BaFin financial market regulator filed a complaint about the suspicious trading with state prosecutors in Braunschweig, prosecutor Joachim Geyer said.

The Braunschweig prosecutors passed on the complaint to their counterparts in Frankfurt, Geyer said. He declined to elaborate.

Neither Frankfurt prosecutors nor BaFin officials could be reached immediately.

Porsche shares fell 10% on Sept. 26, 2005, the day after the announcement that the sports car maker planned to raise its stake in Volkswagen, Europe's biggest car maker, from 5% to 20%.

According to a report in the German business magazine Wirtschaftswoche, prosecutors have noted that a Frankfurt-based asset management firm sold more than 20 000 Porsche shares shortly before their value plunged.

BaFin investigators reportedly suspect that the asset management firm had business ties to Volkswagen and prior knowledge of Porsche's plans. Wirtschaftswoche didn't identify the asset manager.

Porsche, already Volkswagen's biggest shareholder, said last week that it plans to increase its stake in VW from 27.4% to 29.9%.

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