Investing.com -- Avis Budget Group (NYSE: CAR) is shifting into high gear. Shares of the car rental giant accelerated 8% in after-hours trading Monday following news of a massive $650 million cash settlement with hedge fund Pentwater Capital Management LP.

The hefty payout resolves a bitter legal dispute over illicit "short-swing" profits. According to a Securities and Exchange Commission filing, Avis aggressively pursued the funds under Section 16(b) of the Securities Exchange Act, forcing Pentwater to return the gains from a highly controversial stock dump.

The drama traces back to the wild trading days of April 2026. Pentwater—then the company’s second-largest shareholder—helped ignite a massive short squeeze by disclosing a huge stake in Avis, rocketing the stock up more than 600% over just a few weeks.

But the euphoria screeched to a halt. On April 22, immediately after Avis hit a record-high close of nearly $714, Pentwater abruptly unloaded 4.3 million shares at prices ranging between $250 and $700. The massive exit crashed Avis shares by 38% that day, triggering a brutal 48% nosedive in the following session.

Avis CEO Brian Choi didn’t mince words when pointing the finger at the hedge fund for the collapse:

"Given the quantum of shares sold in such a short span of time, our stock price experienced a significant decline. It seems the only insider active during this period of excess volatility was Pentwater Capital."

To close the book on the fiasco, Pentwater has agreed to hand over $650 million in cold, hard cash. The deal is still pending final court approval, requiring a judge to formally agree that Avis diligently pursued its claims and that the nine-figure payout is fair, reasonable, and adequate.