WIRECARD disaster of June 18th, 2020: Must EY compensate the investors?

Berlin-​based law firms Schirp & Part­ner and Dr. Marc Lieb­scher have filed their first law­suits against EY… (Ernst & Young) fol­low­ing the WIR­E­CARD dis­aster of June 18th. Fur­ther law­suits are in pre­par­a­tion. The aim of the law­suits is that EY should com­pensate the WIR­E­CARD in­vestors (shares, bonds, de­riv­at­ives) for their losses. In the past years, EY has al­ways been WIRECARD’s aud­itor and has audited the an­nual fin­an­cial state­ments up to and in­clud­ing 2018 without ob­jec­tions. Only now, in June 2020, has the audit cer­ti­fic­ate for the 2019 fin­an­cial state­ments been refused.

In­form­a­tion on the Law­suit against Ernst & Young »

Dr. Wolfgang Schirp: “We are the first to hold EY ac­count­able in court. Our law­suit is based in par­tic­u­lar on the fact that EY has audited WIRECARD’s al­leged equity cap­ital of up to EUR 1.9 bil­lion in re­cent years without ob­jec­tion, al­though no suf­fi­cient evid­ence was avail­able. This pro­ced­ure is very pe­cu­liar and, ac­cord­ing to our ana­lysis, does not cor­res­pond to the du­ti­ful pro­ced­ure of an aud­itor. Hav­ing re­cently been able to ob­tain judge­ments against an in­ad­equately work­ing rat­ing agency (against Scope re­gard­ing the MS “Deutsch­land” bond), we now also want to vig­or­ously de­mand the li­ab­il­ity of aud­it­ors such as EY. We do not want to al­low aux­il­i­ary per­sons, whose repu­ta­tion and good name made it pos­sible to dam­age in­vestors in the first place, to es­cape without consequences.”

Dr. Marc Lieb­scher: “From today’s point of view, is it pos­sible to make a pro­gnosis for WIR­E­CARD that the con­tinu­ation of the com­pany is prob­able at all? In any case, this is doubt­ful. On the one hand, ac­cord­ing to mar­ket re­ports, it is pos­sible to call in around EUR 2 bil­lion in bor­rowed cap­ital today be­cause the 2019 bal­ance sheet is miss­ing. On the other hand, ma­jor Wir­e­card cus­tom­ers will have to con­sider whether they should ter­min­ate their con­trac­tual re­la­tion­ships for good cause: After all, Wir­e­card, their con­trac­tual part­ner for pay­ment ser­vices, has “lost” EUR 1.9 bil­lion ac­cord­ing to its own state­ments. Who­ever there­fore wants to en­force dam­ages should there­fore not turn against WIR­E­CARD, but against po­tent third parties. This is the reason why we are tak­ing ac­tion against EY, and in­dir­ectly against their li­ab­il­ity in­sur­ance. This is cur­rently the only prom­ising course of ac­tion. Many in­sti­tu­tional in­vestors will also take this path.”