Security & Fraud

BaFin Investigates Possible Mkt Manipulation Related To Wirecard Share Drop

The German financial regulator has opened a preliminary investigation into possible market manipulation after a report on alleged misconduct at Wirecard led to a drop in the company’s share price.

Citing internal documents, Financial Times (FT) reported that a senior executive at Wirecard was suspected last year of using forged and backdated contracts in a series of suspicious transactions, which raised concerns about the accounting integrity of the company. The transactions were cleared by Edo Kurniawan, who is responsible for the payment group’s accounting in Asia-Pacific and is still employed with the company. The whistleblower who spoke to FT reportedly did so because Wirecard never acted on the issue.

Shares in Wirecard fell as much as 25 percent after the article was published, and closed down 13.4 percent on Wednesday (Jan. 30), the largest intraday decline in the stock in nearly three years. The next day, the shares fell 0.3 percent. As a result, Wirecard's CEO Markus Braun lost $221 million of his wealth.

In a statement published on the company's website, Wirecard said the report was “inaccurate, misleading and defamatory,” adding that it “takes all compliance and regulatory obligations extremely seriously." A spokeswoman also said that the company welcomed the investigation.

The German financial regulator, BaFin, announced on Thursday (Jan. 31) that it would investigate “if yesterday’s event constitutes potential market manipulation," citing Article 12 of the EU market abuse regulation. The article prohibits the distribution of “information through the media, including the internet, or by any other means, which gives, or is likely to give, false or misleading signals as to the ... price of a financial instrument.”

While the criminal prosecution office in Munich is not launching a criminal probe, since the transactions happened outside Germany’s jurisdiction, the prosecutors’ office has started a preliminary investigation into possible market abuse associated with the fall in Wirecard’s share price.

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