Are shareholders entitled to compensation?

Wirecard apparently has 1.9 billion euros on its balance sheet, which does not exist. The stock market price falls dramatically. Investors could get compensation.

The financial service provider Wirecard from Aschheim at Munich has been under pressure for days. Because apparently 1.9 billion euros appear in the balance sheet, which, according to the company’s announcement, is “largely unlikely” to exist, Wirecard’s stock exchange price fell by around 70 percent in the past week alone, and boss Markus Braun announced his resignation on Friday . But what about the shareholders now? Are you left with your money after the alleged fraud or are you entitled to compensation?

Lawyer: Shareholders can sue Wirecard for damages

Wirecard investors have lost large sums of money due to the massive price slump. Attorney Heinrich Tettenborn from the law firm in Augsburg specializes in banking and capital market law. His law firm represents the shareholders of Wirecard who are affected. He explains what the legal options for investors could look like. There are a number of conceivable claims: “The company could be the opponent of the claim. However, lawsuits against individual acting persons who may have caused the developments are also possible.”

Above all, the company could be prosecuted under sections 97 and 98 of the Securities Trading Act. It deals with “compensation for failure to publish insider information immediately” and “compensation for publication of untrue inside information”. Specifically, the company should have announced immediately that the 1.9 billion euros did not even exist in the balance sheet, if this was known.

The hurdles to prosecute individuals, in this case for example ex-boss Braun, are higher, says lawyer Tettenborn. You must namely be proven a personal fault according to the German Civil Code (BGB).

Wirecard: Lawsuits against Ernst & Young too?

According to Tettenborn, a third potential opponent is the auditing company Ernst & Young. “But it is even more difficult to assert your claims,” ​​says Tettenborn. Ultimately, the question is whether the test results from Ernst & Young contradict the actual figures at Wirecard.

The Augsburg law firm is currently examining various lawsuits with its own clients. “Some law firms have already filed lawsuits,” explains Heinrich Tettenborn. “It is certainly a good thing as an investor to take care now.” The lawyer emphasizes that those who are now selling their shares in Wirecard are also entitled to compensation if fraud is discovered.

The process of legal proceedings against Wirecard and individual responsible persons says Tettenborn: “There will probably be a sample investor proceeding. In this, fundamental questions about legal responsibility will be clarified.” On the basis of this, individual shareholders could then receive compensation.

Lawsuits against Wirecard: Compensation for damages only in several years?

Basically, the injured party is entitled to the full amount lost. “But I reckon with a time frame of several months up to years until there are corresponding judgments,” says Tettenborn. The duration also depends on the exhaustion of the legal remedies by the various parties. “It can go faster if Wirecard offers investors comparisons.” The lawyer also emphasizes: “In such cases, the question is always who can be proven to and then who can still pay anything at all.”

Markus Braun has not been the boss at Wirecard since Friday.

Photo: Lino Mirgeler, dpa

The consequences for Wirecard itself cannot yet be foreseen. Lawyer Tettenborn expects the Federal Financial Supervisory Authority (BaFin) to expand its investigations: “Wirecard has to fulfill its obligations, that is, to present a balance sheet at short notice. Otherwise, BaFin could face fines and fines.”

BaFin is checking whether Wirecard has committed market manipulation

In response to our editorial team’s request, BaFin said: “There is only one aspect to be checked. The issue here is whether Wirecard AG may have disseminated incorrect or misleading information on financial reporting and thus committed market manipulation. The am information released last Thursday and Monday morning. ”

The authority also points out that it had been conducting an investigation into market manipulation since January 2019 and reported it in two parts: first in April 2019 and then at the beginning of June 2020, when it came to Wirecard’s communication in the run-up to the KPMG investigation report , specifically about clues for misleading information in the run-up to the report and thus for information-based market manipulation.

At the moment, there is little that can be said about the criminal investigation of the Wirecard case, you have to know the files, says attorney Tettenborn. The Munich public prosecutor’s office is scrutinizing the Wirecard case.

Wirecard: 1.9 billion euros from the balance sheet probably do not exist

Another decisive factor for the future of Wirecard is likely to be whether the banks turn off the money tap on Wirecard and make use of the option to terminate loans of two billion euros. However, the company stresses that it is having “constructive talks” with its lending banks. According to Wirecard, the banks would be entitled to terminate the contract if the company did not submit a certified annual financial statement. In addition, the Deutsche Bank fund company DWS Wirecard and ex-boss Braun wants to sue.

The focus of the accounting scandal are two Asian banks and a trustee who has been managing the accounts for Wirecard since the end of last year. Allegedly 1.9 billion euros were posted to the accounts. However, the auditors who work for Wirecard now doubt that these 1.9 billion euros actually exist. The auditing company Ernst & Young has therefore not audited the annual financial statements. She suspects intent to deceive.

Wirecard has been in distress for over a year

The evidence of fraud is overwhelming. The Philippine bank BDO Unibank, which allegedly had one of two suspicious trust accounts for Wirecard, said on Friday that the German company was not a customer and reported a manipulated document that had falsified signatures from bank employees. In the meantime, Wirecard had to admit that 1.9 billion euros from its own balance sheet probably didn’t even exist.

Wirecard processes cashless payments for merchants, both at checkouts and online. The company has been in distress for over a year since the Londoners Financial Times accused management of balance sheet manipulation in a series of articles. (with dpa)

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