RIP Wirecard fi

Day 8 Post-Implosion – Bankruptcy proceedings, EY fraud narrative, and the Regulatory Nirvana

As already reported yesterday Wirecard has filed for bankruptcy proceedings in Munich as of June 25th, 2020. Guys, we will not miss you! We are convinced that the world is much safer without this fraudulent company.

The Munich attorney  Michael Jaffé got appointed by the Munich court for litigation to establish a report on the financial situation of the group.

Only hours after Wirecard did the bankruptcy filing, it’s former auditor EY was quick to continue the fraud narrative started by the former CEO Markus Braun. Because of this fraudulent approach, EY would not have been able to discover the manipulative accounting practices of Wirecard over the many years they audited the DAX company.

Is this fraud narrative a viable explanation for EY failure to expose the accounting manipulations? Most likely not! Probably this is done already in preparation for the massive legal claims which for sure will be filed against them.  Considering the many hints for irregularities of the company publicly available for years already, it will be quite difficult for EY to fight against the legal claims of the damaged retail investors.

Es gibt deutliche Hinweise, dass es sich um einen umfassenden Betrug handelt, an dem mehrere Parteien rund um die Welt und in verschiedenen Institutionen mit gezielter Täuschungsabsicht beteiligt waren. Im Rahmen der Abschlussprüfung für das Geschäftsjahr 2019 hat EY entdeckt, dass gefälschte Saldenbestätigungen und weitere gefälschte Unterlagen für die Treuhandkonten vorgelegt wurden. Konspirativer Betrug, der darauf abzielt, die Investoren und die Öffentlichkeit zu täuschen, geht oft mit umfangreichen Anstrengungen einher, systematisch und in großem Stil Unterlagen zu fälschen. Auch mit umfangreich erweiterten Prüfungshandlungen ist es unter Umständen nicht möglich, diese Art von konspirativem Betrug aufzudecken. (EY Statement)

EY is not the only institution having issues with the Wirecard case. Also, the German watchdog BaFin gets under pressure as the EU Commission requests an investigation from ESMA in BAFIN´s activities relating to Wirecard. And indeed, given the many public warnings and investigative reports worked out by competent journalists, BaFin should have started to seriously supervise its protege Wirecard instead of attacking its critics. BaFin is thus responsible for a regulatory nirvana and a massive crisis of confidence in the German capital market.

The UK watchdog FCA was rather quick to crack down the British UK subsidiary of Wirecard and decided that Wirecard Card Solutions Limited

  • must not dispose of any assets or funds
  • must not carry on any regulated activities
  • must set out a statement on its website and communicate to customers that it is no longer permitted to conduct any regulated activities.

So far we have only seen the tip of the iceberg in the Wirecard Case. That much is certain. Stay tuned!

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