1 See the official Porsche website at www.porsche-se.com/pho/en/news/newsarchive2008/?pool=pho&id=2008-10-26 as well as the respective articles in the International Herald Tribune, the N.Y. Times, or the Independent, Oct. 27, 2008.Google Scholar

2 See Porsche closes in on control of VW, International Herald Tribune, Oct. 27, 2008.Google Scholar

3 Compare the price of the Porsche stock on this day as well as the relevant articles commenting on this incident.Google Scholar

4 Davies, Howard & Green, David, Global Financial Regulation, The Essential Guide (2008), chapter 1; Bumke, Christian, Kapitalmarktregulierung. Eine Untersuchung über Konzeption und Dogmatik des Regulierungsverwaltungsrechts, 41 Die Verwaltung 227 (2008).Google Scholar

5 See Zumbansen, Peer & Saam, Daniel, The ECJ, Volkswagen and European Corporate Law: Reshaping the European Varieties of Capitalism, 8 German Law Journal 1027 (2007), available at: http://www.germanlawjournal.com/pdf/Vol08No11/PDF_Vol_08_No_11_1027-1051_Articles_Zumbansen_Saam.pdf.Google Scholar

6 See recently Enriques, Luca & Volpin, Paolo, Corporate Governance Reforms in Continental Europe, 21 Journal of Economic Perspectives 117 (2007), and Eddy Wymeersch, Corporate Governance and Financial Stability, University of Ghent Financial Law Institute Working Paper Series WP 2008–11 http://ssrn.com/abstract=1288631 (2008).Google Scholar

7 This is further developed in Zumbansen, Peer, 'New Governance’ in European Corporate Governance Regulation as Transnational Legal Pluralism, 15 European Law Journal 246 [available at http://ssrn.com/abstract=1128145] (2008).Google Scholar

8 Kern Alexander, Rahul Dhumale, & Eatwell, John, Global Governance of Financial Systems: The International Regulation of Systemic Risk, chapter 2 (2006).Google Scholar

9 See in more detail Id., chapters 4 and 10.Google Scholar

10 See Squeezy Money, The Economist, Oct. 30, 2008.Google Scholar

11 Adam Jones of Morgan Stanley on October 8, 2008. See Id. Google Scholar

12 See, e.g., Porsche in $20bn ‘sting', The Independent of October 29, 2008, or Hedge funds make GBP 18bn loss on VW, www.new.bbc.co.uk dated October 29, 2008.Google Scholar

13 Here reference shall be made to the ECJ's Volkswagen decision, Case C-112/2005, dated 23 October 2007, Commission v. Federal Republic of Germany “Volkswagen”, which dealt with the Volkswagen statute, which effectively gave the Federal Government and the federal state of Lower Saxony a veto against majority acquisition while only holding a fifth of all shares. See in more details Zumbansen & Saam (2007). It is interesting to note that just recently the premier of Lower Saxony, Christian Wulff expected another decision of the ECJ in this regard. See Eine VW-Aktie für 1000 Euro!, www.boerse.ard.de dated Oct 28, 2008.Google Scholar

14 The best contrast can be given when reflecting the UK situation. In the UK, the concept of “creeping control” has long been regulated by the UK Takeover Panel since the issue of transparency has a different status on the island. The adoption of the Transparency Directive and the Disclosure Rules and Transparency Rules (DTR) are a good example for this. DTR require disclosure of voting rights attached to shares, so notification has to be made once a shareholding of 3% or more is acquired as well as for every 1% increase above the 3% threshold, regardless of whether a takeover is contemplated.Google Scholar

15 See Squeezy Money (note 10).Google Scholar

16 See Porsche takeover loophole drives calls for new code, The Independent, Nov. 1, 2008, referring to a statement made by Thomas Möllers, a capital markets law professor of Augsburg University.Google Scholar

17 See The Day of the Locusts, Time Magazine, May 15, 2005 available at: www.time.com/time/magazine/article/0,9171,901050523-1061439,00.html.Google Scholar

18 In finance the term short-selling is interchangeably used with the term “shorting”. For a comprehensive overview on short-selling, see Fabozzi (2004), 7–59. A good introduction is offered by Lawrence Gitman & Michael Joehnk, Fundamentals of Investing 62–65 (2005).Google Scholar

19 However, the term is also often used in general for practices allowing investors to gain from a decline in the price of a financial instrument by making use of strategies such as put options. A put option is a financial contract between two parties being the seller and the buyer, giving the buyer the right but not the obligation to sell a commodity or financial instrument to the seller of the respective option at a certain time for a particular price, the so-called strike price. The seller however has the obligation to purchase the underlying asset, being the respective commodity or financial instrument at that strike price in case the buyer makes use of his option.Google Scholar

20 Such repurchasing is also referred to as closing the respective position.Google Scholar

21 See in details Tom Taulli, What is Short Selling? (2004) or alternatively, William O'Neil & Gil Morales, How To Make Money Selling Stocks Short (2005).Google Scholar

22 See The Day of the Locusts (note 17).Google Scholar

23 See Squeezy Money (note 10).Google Scholar

24 See, for example, Frank Partnoy & Randall Thomas, Gap Filling, Hedge Funds and Financial Innovation, in New Financial Instruments and Institutions: Opportunities and Policy Challenges 101 (Yatsuyuki Fuchita & Robert E. Litan eds., 2007); and Engelen, Ewald, The Case for Financialization, 12 Competition and Change 111 (2008). On the pros and cons of Short Selling instruments, see Charles M. Jones & Owen A. Lamont, Short Sale Constraints And Stock Returns (2001), CRSP Working Paper No. 533, available at SSRN: http://ssrn.com/abstract=281514 or DOI: 10.2139/ssrn.281514 or Jennifer Fancis, Mohan Venkatachalam, & Yun Zhang, Do Short Selles Convey Information About Changes in Fundamentals or Risk? (2005), available at SSRN: http://ssrn.com/abstract=815668.Google Scholar

25 Rule 10a-1 basically states that a listed security when sold must either be sold short at a price above the price at which the immediately preceding sale was affected or at the last sale price if it is higher than the last different price. See for more details www.sec.gov/rules/concept/34-42037.htm#P49_9887.Google Scholar

26 These amendments, especially from regulation SHO in 2005 onwards, primarily focused on naked short selling practices. Available at: www.sec.gov.Google Scholar

27 Regulation SHO and Rule 10a-1, 72 Fed. Reg. 36,348 (July 3, 2007) (to be codified at 17 CFR § 240.10a-1, 17 CFR § 242.200, 17 CFR § 242.201). Available at: www.sec.gov/rules/final/2007/34-55970.pdf.Google Scholar

28 Emergency Order Pursuant to Section 12(k)(2) of the Securities Exchange Act of 1934 Taking Temporary Action To Respond to Market Developments, Exchange Act of 1934 Release No. 58166, (July 15, 2008). Available at: www.sec.gov/news/press/2008/2008-143.htm. However, there was an exception released for market makers.Google Scholar

29 Emergency Order Pursuant to Section 12(k)(2) of the Securities Exchange Act of 1934 Taking Temporary Action To Respond to Market Developments, Exchange Act of 1934 Release No. 58592, (Sept. 18, 2008). Available at www.sec.gov/rules/other/2008/34-58592.pdf.Google Scholar

30 Laura Meckler and Kara Scannell, McCain Says Cox Should be Fired As SEC Chief Amid ‘Casino’ Markets, The Wall Street Journal, Nov 24, (2008).Google Scholar

31 Robb, Greg, Bernanke: Uptick rule might have been useful during crisis, Marketwatch, Feb 25, (2009).Google Scholar

32 Orol, Ronald, Frank: Up-tick rule to be introduced in a month SEC Chairwoman Schapiro met recently with Frank to discuss regulations, MarketWatch, March 10, (2009).Google Scholar

33 The Committee of European Securities Regulators, Measures Adopted by CESR Members on Short Selling, March 31, (2009). The European overview is available at: www.cesreu.org/popup2.php?id=5238.Google Scholar

34 It is worth noting that Bulgaria, Czech Republic, Estonia, Iceland, Cyprus, Malta, Romania, Slovakia, Slovenia or Finland have not taken any actions in this regard yet.Google Scholar

35 See www.bafin.de/cln_116/nn_720486/SharedDocs/Artikel/EN/Service/Meldungen/meldung_080919_leerverkauf. html?__nnn=true.Google Scholar

36 Bundesanstalt für Finanzdienstleistungsaufsicht, Restrictions Maintained on Short-Selling Financial Stocks. Available at: www.bafin.de/cln_116/nn_720486/SharedDocs/Artikel/EN/Service/Meldungen/meldung__081219__leerv__verlaeng.html?__nnn=true.Google Scholar

37 See in particular the massive critical statements by the CEO of DWS Klaus Kaldemorgen. Christiaan Hetzner and Jörn Poltz, Porsche weist Kritik von Fondsanbieter DWS an VW-Geschäft zurück, Reuters Deutschland, Nov 9, (2008). Available at: http://de.reuters.com/articlePrint?articleId=DEL945447220081109.Google Scholar

38 EC Directive 2004/109 of 15 December 2004 on the harmonization of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC. As background information, the law of the EU is unique due to its supranational character. Various legislative acts of the EU such as directives, regulations or decisions are in place. An EU directive as a legislative act like the EU Transparency Directive requires member states to achieve the particular result dictating the means of achieving this result whereas an EU regulation is an self-executing act which does not need any implementation measures.Google Scholar

39 See preamble to EC Directive 2004/109 of 15 December 2004.Google Scholar

40 Criticism arose from various political strands including the financial services industry, represented by DWS Investments, a member of Deutsche Bank Group, unions, represented by the CEO of the VW work council Bernd Osterloh, various analysts of the German stock market as well as voices from academia, all complaining a lack of transparency regarding Porsche's actions.Google Scholar

41 See Porsche Heads for Domination Agreement, News Archives 2008, Oct. 26, 2008. Available at: www.porsche-se.com/pho/en/news/newsarchive2008/?pool=pho&id=2008-10-26.Google Scholar

42 See Squeezy Money (note 10).Google Scholar

43 See Section 2 WpHG for the definition of financial instruments.Google Scholar

44 See i.e. Mason, Rowena, Schaeffler family buys out tyre giant Continental for € 12bn, Telegraph.co.uk, Aug. 23, 2008. Available at: www.telegraph.co.uk Google Scholar

45 See BaFin press release of 21 August 2008. Available at: www.bafin.de.Google Scholar

46 See the official press release of Jan 5, 2009.Google Scholar

47 See, e.g., Financial Times Germany, Mar. 16, 2009.Google Scholar

48 See, e.g., Handelsblatt, Jan. 26, 2009.Google Scholar

49 See Frankfurter Allgemeine Zeitung, Feb. 17, 2009.Google Scholar

50 See, supra, note 42.Google Scholar

51 See Armitstead, Louise, Porsche crashes into controversy in the ultimate ‘short squeeze', The Daily Telegraph, Nov 3, 2008.Google Scholar

52 Contrary to this, the new FSA rules which will come into force in September 2009 will require the disclosure of cash-settled derivatives.Google Scholar

53 See Niemeyer, Jonas, An Economic Analysis of Securities Markets Regulation and Supervision: Where to Go after the Lamfalussy Report?, SSE/EFI Working Paper Series in Economics and Finance, No. 482 (2001).Google Scholar

54 See Arner, Douglas, Financial Stability, Economic Growth and the Role of Law 281 (2007).CrossRefGoogle Scholar