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Crush Your Enemies (Part II)

Unless you have been sleeping under a rock for some extended period of time, you will remember that Porsche is not just a German automobile manufacturer, but also a "fiendishly clever," hedge fund in its own right. Scant surprise then that the Teutonic threat is realized.

Net profit in the first-half ended Jan. 31 jumped to €5.55 billion ($7.33 billion) from €1.26 billion in the same period the previous year. Pretax profit climbed to €7.34 billion from €1.66 billion. The increase stemmed largely from cash-settled option transactions in VW shares. Income from these transactions rose to €6.84 billion from €850 million a year earlier.

As you might remember, accusations of share manipulation began to fly almost immediately after the incident, as Germany's disclosure laws did not require Porsche to reveal positions in VW that were suggestive of a takeover. Now, even that hitch is clear.

Some hedge funds, which stood to face billions of dollars in losses, accused Porsche of misleading them about its intent to gain full control of VW. On Oct. 29, BaFin, Germany's securities regulator, said it opened a formal investigation into VW's share-price movements for signs of market manipulation.
However, BaFin said Tuesday it has halted its probe. "We didn't find any indications for a share manipulation," a BaFin spokeswoman said.

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In Germany There Is No Age Of Consent With Cash Settled Options