Wirecard: Questioning of Markus Braun continues – defeat for EY

In the crim­inal trial against three former man­agers of Wir­e­card AG, the ques­tion­ing of ex-​Wirecard-​CEO Markus Braun con­tin­ued. (more…)

Wirecard scandal: BAFin not liable

The Fed­eral Fin­an­cial Su­per­vis­ory Au­thor­ity (BAFin) is not li­able to in­jured Wir­e­card in­vestors. This has now been de­cided in the second in­stance by the Frank­furt Higher Re­gional Court (1 U 173/22), thus con­firm­ing the rul­ing of the lower court.

In June 2020, the fin­an­cial ser­vices pro­vider was forced to ad­mit that 1.9 bil­lion euros, which should have been in es­crow ac­counts in Asia, could not be found. As a res­ult, the share price plummeted dra­mat­ic­ally, and Wir­e­card had to file for in­solv­ency a short time later.

As a res­ult, the Ger­man fin­an­cial su­per­vis­ory au­thor­ity also came un­der heavy cri­ti­cism. For years, the BAFin had pro­tec­ted the then Dax com­pany and failed to dis­cover the fraud­u­lent activities.
Nearly 500 pro­ceed­ings by ag­grieved in­vestors are pending be­fore the Frank­furt Higher Re­gional Court, claim­ing dam­ages from BAFin. In the spe­cific case, claims for dam­ages of ap­prox­im­ately 40,000 euros were at issue.

How­ever, the court now ruled that the au­thor­ity had not vi­ol­ated its of­fi­cial du­ties. Thus, the plaintiff had “not presen­ted any tan­gible evid­ence for the as­sump­tion” that BAFin should have com­mis­sioned a spe­cial audit at an earlier point in time. The court also ruled out a claim for dam­ages for breach of of­fi­cial duty. The fact that em­ploy­ees of the su­per­vis­ory au­thor­ity held shares in Wir­e­card AG was also “not immoral”.

The de­cision of the Frank­furt Higher Re­gional Court is not yet final.

Action Options For Investors

How­ever, ag­grieved Wir­e­card in­vestors should not be un­settled by this rul­ing. The law­yers from the law firm Schirp & Part­ner already as­sumed when the Wir­e­card scan­dal be­came known that a law­suit against BAFin would have little chance of suc­cess. In­stead, we re­com­mend that those who are will­ing to sue as­sert their claims against Wir­e­card AG’s long-​standing aud­itor, Ernst & Young (EY).

In­jured parties can file in­di­vidual law­suits or join the Cap­ital In­vestor Model Pro­ceed­ings (KapMuG), which have been opened in the mean­time. In such pro­ceed­ings, the claims of ag­grieved in­vestors are bundled and legal dis­putes are re­solved in a single trial with a model plaintiff. The law firm Schirp & Part­ner rep­res­ents the largest group of sus­pen­ded pro­ceed­ings and has ap­plied to rep­res­ent the model plaintiff in or­der to ad­vance the KapMuG pro­ceed­ings as quickly as pos­sible and in the in­terests of the ag­grieved parties.

We will be happy to re­gister for the model pro­ceed­ings on your be­half. Fur­ther in­form­a­tion on the Wir­e­card scan­dal and our ac­tion against EY can be found here.

Wirecard trial: Serious allegations against EY

It would have been pos­sible to re­act dif­fer­ently at that point, and then it would have been un­covered a year and a half earlier.” (more…)

Wirecard: Insolvency Administrator Publishes 4th Status Report

In the in­solv­ency pro­ceed­ings re­lat­ing to the as­sets of Wir­e­card AG, in­solv­ency ad­min­is­trator Dr. Mi­chael Jaffé has pub­lished his fourth status re­port at the end of 2022.

In it, Mr. Jaffé makes it clear that one of the fo­cal points of the furhter pro­cessing of the pro­ceed­ings will be the (con­ten­tious) en­force­ment of claims against former ex­ec­ut­ive bod­ies, such as the former Chair­man Dr. Markus Braun. How­ever, the en­force­ment of the claims would in­volve a great deal of time and ef­fort. The pending legal dis­putes are likely to take sev­eral more years.

In ad­di­tion, the in­solv­ency ad­min­is­tra­tion worked in­tens­ively dur­ing the audit period on furthe cla­ri­fic­a­tion of the facts. Par­tic­u­lar fo­cus was placed on the so-​called TPA busi­ness (third -party busi­ness). To this end, the in­solv­ency ad­min­is­trator was able to in­spect the ac­count state­ments of the trust ac­counts in ques­tion and as­cer­tain that the al­leged and ac­coun­ted TPA trans­ac­tion could never have ex­is­ted. Dr. Jaffé thus clearly con­tra­dicts the ac­count given by former Wir­e­card CEO Markus Braun, who is cur­rently stand­ing trial be­fore the Mu­nich Re­gional Court. Braun denies the al­leg­a­tions made against him. Cur­rent in­form­a­tion on the crim­inal trail can be found here.

Are share­hold­ers cred­it­ors in the on­go­ing in­solv­ency proceedings?

Ac­cord­ing to the in­solv­ency ad­min­is­trator, the ques­tion of whether (former) share­hold­ers of Wir­e­card AG are cred­it­ors in the in­solv­ency pro­ceed­ings in the rang of § 38 InsO or not posed a par­tic­u­lar chal­lenge. In this re­gard, the fund com­pany Union in­vest­ment had ini­ti­ated de­clar­at­ory pro­ceed­ings. On Novem­ber 23, 2022, the Mu­nich I Re­gional Court ruled against the former share­holder and dis­missed the ac­tion. This means that share­hold­ers can­not re­gister their claims as cred­it­ors in the rang of § 38 InsO. Thus, the claims can only be ser­viced after other cred­it­ors (e.g. sup­pli­ers and lenders) have been satisfied.

How­ever both the in­solv­ency ad­min­is­trator and we at the law firm Schirp & Part­ner do not ex­pect this rul­ing to be­come leg­ally bind­ing. Rather, the Fed­eral Court of Just­ive will have to rule on this fun­da­mental issue.

Due to the de­cision of the re­gional court Mu­nich a state­ment of the de­mands of the share­hold­ers to the in­solv­ency table is not pos­sible at present, com­mu­nic­ated the in­solv­ency mad­min­is­trator fur­ther. Bond­hold­ers are ex­pressly not af­fected by this decision.

The next re­view date has been set for Oc­to­ber 19, 2023.

All in­form­a­tion on the Wir­e­card scan­dal and the pos­sible courses of ac­tion for ag­grieved in­vestors can be found here on our homepage.

WIRECARD: Trial against Markus Braun to begin in December

Trial against Markus Braun to begin on December 8, 2022

The crim­inal trial against the former CEO of the in­solv­ent pay­ment ser­vices pro­vider Wir­e­card, Markus Braun, will be­gin on Decem­ber 8, 2022 be­fore the 4th Grand Crim­inal Cham­ber of the Mu­nich Re­gional Court. The trial will be held in the courtroom of the Munich-​Stadelheim cor­rec­tional fa­cil­ity and will last 100 days un­til 2024.

In ad­di­tion to Markus Braun, other de­fend­ants in­clude Wirecard’s former chief fin­an­cial of­ficer, Stephan von Erffa, and Wirecard’s rep­res­ent­at­ive in Dubai, Oliver Bel­len­haus. They are ac­cused of ac­count­ing fraud, mar­ket ma­nip­u­la­tion, em­bez­zle­ment in sev­eral cases and pro­fes­sional gang fraud.

Information on proceedings against EY

If you would like to have your claims for dam­ages ex­amined free of charge and are in­ter­ested in tak­ing legal ac­tion, you can find all fur­ther in­form­a­tion on our ac­tion against EY here. Ernst & Young GmbH Wirtschaft­s­prü­fungs­gesell­schaft has audited the an­nual fin­an­cial state­ments of Wir­e­card AG up to and in­clud­ing 2018 without any ob­jec­tions. The law firm Schirp & Part­ner is EY’s strongest legal op­pon­ent, with over 1,300 law­suits cur­rently pending.

Wirecard: Insolvency administrator publishes new status report

Fol­low­ing the re­view meet­ing held on April 7, 2022, the in­solv­ency ad­min­is­trator of Wir­e­card AG, Dr. Mi­chael Jaffé, has now pub­lished a new status re­port on the in­solv­ency proceedings.

One oft he main top­ics oft he new re­port was the li­quid­a­tion of Wir­e­card AG’s former sub­si­di­ary, Wir­e­card Bank. Ac­cord­ing to Mr. Jaffé, the in­solv­ency ad­min­is­trator was able to li­quid­ate al­most 227 mil­lion euros.l The fin­an­cial su­per­cis­ory au­thor­ity BaFin had ini­tially frozen Wir­e­card Bank’s money after the scan­dal be­came known, but has now re­leased it again.

The in­solv­ency ad­min­is­trator was also able to in­crease the as­sets from the li­quid­a­tion of in­dir­e­cetly valiable sub­si­di­ar­ies of Wir­e­card AG.

How­ever the re­port also shows that des­pite the se­cured funds, the claims of cred­it­ors and share­hold­ers are likely tob e dis­pro­por­tion­ately higher. For this reason, the in­solv­ency ad­mis­trator is un­able to provide any in­form­a­tion on the tim­ing and amount of an ini­tial pay­ment on ac­count at this time. In­jured in­vestors must con­tinue to be patient.

Investigations by the insolvency administrator against EY

As in the pre­vi­ous status re­port the in­solv­ency ad­min­is­trator once again made it clear that the audit­ing firm EY – against which we are also rep­res­ent­ing nu­mer­ous in­vestors in court – con­tin­ues to re­fuse any as­sist­ance in cla­ri­fy­ing the facts oft he case.

To this end, the in­solv­ency ad­min­is­trator has com­mis­sioned an ex­ternal audit­ing firm to provide an ex­pert opin­ion on the ques­tion of whether EY com­plied with ist du­ties in con­nec­tion with the audits oft he fin­an­cial state­ments or whether there were any breaches of duty.

Ac­cord­ing to Mr. Jaffé, the cla­ri­fic­a­tion work in this re­gard is well ad­vanced, but still not complete.

Action for a declaration of invalidity of the 2017 and 2018 annual financial statements

Back in May 2022, we re­por­ted that the Mu­nich I Re­gional Court had de­clared Wirecard’s fin­an­cial state­ments for 2017 and 2018 null and void based on a law­suit filed by the in­solv­necy administrator.

The law­suit was based on the al­leged fic­ti­tious book­ings with which man­agers oft he com­pany are said to have in­flated the bal­ance sheets by fic­ti­tious amounts in the billions.

Ac­cord­ing tot he status re­port, this de­cision re­moves the basis for pay­ing di­vidends to share­hold­ers for the years in ques­tion. In his re­port, how­ever, in­solv­ency ad­min­is­trator Jaffé presen­ted a claw­back of di­cidend pay­ments as un­likely: „Any claw­back of di­vidends will there­fore have no eco­nomic sig­ni­fic­ance fort he vast ma­jor­ity of small and private investors.“

In any case, he said, it was ques­tion­able whether it could take place at all in the case of very small amounts.

New test date

The new re­view date in the Wir­e­card AG in­solv­ency pro­ceed­ings has been set for Novem­ber 29, 2022.


The de­cision of the Mu­nich I Re­gional Court was pub­lished in the Fed­eral Gaz­ette on March 16, 2022. (more…)

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