Market Regulator In Germany Files Complaint Alleging Wirecard Short Sale

A German markets regulator has filed a complaint with prosecutors alleging that shares of Wirecard were manipulated by someone who potentially had prior knowledge of a forthcoming damaging article written by the Financial Times, according to Reuters.

Wirecard’s stocks fell after the Jan. 30 article was released, accusing the payments company of financial malfeasance.

The Federal Financial Supervisory Authority, known as BaFin, said the complaint centered around about 12 people it suspected in a short sale attack. Bafin also said it was investigating other cases of possible market manipulation in the case.

“We have filed a complaint to the Munich Prosecutor’s Office citing suspected market manipulation in the form of a short-selling attack on Wirecard AG,” BaFin said, according to the report.

The regulator doesn’t have the authority to file charges, but the prosecutor does, and it’s also investigating FT reporter Dan McCrum, the report said.

The articles were spurred by a whistleblower who claimed the company was involved in fraud and creative accounting at Wirecard’s Singapore office. The articles resulted in the company losing $10 billion in stock market value, and it also started a police investigation.

Der Spiegel, a German news organization, reported that the market manipulation investigation had nothing to do whether the FT articles were truthful or not. Wirecard has vigorously denied doing anything wrong, and said that a recently completed investigation by outside law firm Rajah & Tann proves as much.

After the articles came out, the company said: “Wirecard notes yesterday’s article in the Financial Times. This is the third time that the same highly confidential documents from a compliance audit have been used as the basis for a defamatory media coverage.”

It went on to say that “these allegations have been investigated in a robust compliance process both by our internal compliance team and by an independent investigation.”

Wirecard said there was no evidence of wrongdoing and that it was “taking legal actions against the FT and its unethical reporting.”

The Financial Times has said it stands by its reporting.

The investigation by BaFin centers around whether someone was tipped off about the FT article and was trying to profit from the declines. BaFin put a two-month ban on short sales in Wirecard right after the stock fell. That ban is due to expire on Thursday, and it’s not known whether it’s going to be extended.