Application for model proceedings under the KapMuG

The Mu­nich Re­gional Court has now ini­ti­ated KapMuG (Cap­ital In­vestor Model Pro­ceed­ings) pro­ceed­ings in the Wir­e­card matter.

In this type of pro­ceed­ing, all claims against EY for dam­ages in con­nec­tion with the Wir­e­card in­solv­ency are to be bundled. The Bav­arian Su­preme Court is re­spons­ible. This court is now to ex­am­ine whether EY breached its du­ties when audit­ing Wirecard’s bal­ance sheets, which could give rise to claims for dam­ages by in­vestors and in­sti­tu­tional in­vestors. If you would like to file your claims for model pro­ceed­ings un­der the Ger­man Cap­ital In­vestor Model Pro­ceed­ings Act (Kapit­alan­leger Musterver­fahrens­ge­setz – KapMuG) without fil­ing your own law­suit, you can find the re­quired doc­u­ments and a sample cost cal­cu­la­tion here.

Legal action against EY

It is pos­sible and sens­ible to file a law­suit against EY even if KapMuG pro­ceed­ings have been ini­ti­ated, as oth­er­wise there is a risk of con­sid­er­able loss of time. If you would like to have your claims for dam­ages ex­amined free of charge and are also in­ter­ested in tak­ing legal ac­tion against EY, you can find more in­form­a­tion here.

Filing of claims in the insolvency proceedings of WIRECARD AG

On June 25, 2020, WIR­E­CARD AG filed an ap­plic­a­tion for the open­ing of in­solv­ency pro­ceed­ings at the com­pet­ent dis­trict court in Mu­nich due to im­min­ent in­solv­ency and over-​indebtedness. We be­lieve that it is worth­while to file your claim in the in­solv­ency pro­ceed­ings of WIR­E­CARD AG. Fur­ther in­form­a­tion can be found here.

What is a capital investor model procedure?

The cap­ital in­vestor model pro­ceed­ings ac­cord­ing to the so-​called Cap­ital In­vestor Model Pro­ceed­ings Act (Kapit­alan­le­ger­musterver­fahrens­ge­setz, KapMuG) are in­ten­ded to make it easier for ag­grieved in­vestors to as­sert claims for dam­ages by en­abling model pro­ceed­ings for false, mis­lead­ing or omit­ted pub­lic cap­ital mar­ket in­form­a­tion, for ex­ample in an­nual fin­an­cial state­ments or stock ex­change prospectuses.

The aim is to bundle the claims of ag­grieved in­vestors and re­solve legal dis­putes in a single trial. Thus, as long as the model pro­ceed­ings are on­go­ing, other law­suits with the same claim are suspended.

In large pro­ceed­ings, such as those against Deutsche Telekom, model pro­ceed­ings can there­fore re­lieve the courts.

KapMuG and Wirecard

In mid-​March 2022, the Mu­nich Re­gional Court ini­ti­ated the model pro­ceed­ings in the Wir­e­card case. In this con­text, the or­der for ref­er­ence, which ini­ti­ates the KapMuG pro­ceed­ings, is not only dir­ec­ted at de­clar­at­ory tar­gets against EY but also against WIR­E­CARD AG and its re­spons­ible per­sons, in­clud­ing Markus Braun. Spe­cific­ally, WIR­E­CARD AG is ac­cused of a breach of dis­clos­ure ob­lig­a­tions, in which EY is al­leged to have been guilty of aid­ing and abet­ting. The test case is to de­cide on the fol­low­ing facts:

• In­cor­rect­ness of the an­nual re­ports of WIR­E­CARD AG
• WIR­E­CARD AG was aware by 2015 at the latest that the trust ac­counts did not show the pub­lished bank balances
• Markus Braun, as a mem­ber of the board of dir­ect­ors, in­cor­rectly rep­res­en­ted or con­cealed the fin­an­cial cir­cum­stances of the com­pany by pub­lish­ing false an­nual re­ports, both WIR­E­CARD AG and Markus Braun ac­ted immorally
• EY’s li­ab­il­ity for dam­ages, esp. cla­ri­fic­a­tion of in­tent with re­gard to aid­ing and abet­ting the breach of WIR­E­CARD AG’s pub­li­city obligations
• The price dif­fer­ence dam­age is com­pens­able without con­crete proof of causality

The ques­tion of whether EY com­mit­ted its own breach of duty from in­ten­tional im­moral dam­age is un­for­tu­nately not the sub­ject of the model pro­ceed­ings and, in our opin­ion, not eli­gible for KapMuG.

Model proceedings or filing a lawsuit?

It is ne­ces­sary for every ag­grieved party to file a law­suit them­selves, even des­pite the model pro­ced­ure, since the court ex­pli­citly does not ex­am­ine whether an in­vestor has a claim, but, as shown, only ex­am­ines and de­term­ines cer­tain gen­eral as­pects that af­fect every pro­ced­ure. All those who file claims to the model pro­ceed­ings without fil­ing their own law­suit can thus in­hibit the run­ning of the stat­ute of lim­it­a­tions. But the fil­ing of an in­di­vidual law­suit is still re­quired after the con­clu­sion of the model pro­ced­ure. How­ever, any­one who does not file a law­suit un­til after the con­clu­sion of the model pro­ced­ure loses valu­able time.

We have also col­lec­ted the an­swers to our cli­ents’ most im­port­ant ques­tions in an FAQ.

The law firm Schirp & Partner and the KapMuG

The law firm Schirp & Part­ner has many years of ex­per­i­ence with cap­ital in­vestor model pro­ceed­ings. For ex­ample, At­tor­ney Radtke-​Rieger was sig­ni­fic­antly in­volved in the re­vi­sion of the com­ment­ary on the Cap­ital In­vestor Model Case Act, the stand­ard work on the text of the law. She also wrote the art­icles on the ad­miss­ib­il­ity of the ap­plic­a­tion for a model pro­ced­ure and on its pub­lic­a­tion. In its ref­er­ence de­cision on the de­cisions of the Mu­nich Re­gional Court, the Mu­nich Higher Re­gional Court it­self quoted Ms. Radtke-​Rieger sev­eral times at key points.

WHAT SHOULD INVESTORS DO NOW?

If not already done, in­vestors should con­tinue to con­sider fil­ing suit for dam­ages against EY, whether at their own ex­pense or covered by legal ex­penses in­sur­ance. If you have not already done so: You too can join the plaintiffs’ as­so­ci­ation, for more in­form­a­tion click HERE.

Any in­vestor who is cur­rently re­frain­ing from fil­ing a law­suit and would like to wait un­til after the con­clu­sion of the test case should at least file his claims in the test case to pre­vent the stat­ute of lim­it­a­tions from run­ning. The costs for this are by law a so-​called 0.8 at­tor­ney fee and a 0.5 court fee. HERE you will find an ex­em­plary cal­cu­la­tion and the doc­u­ments we need from you.

In ad­di­tion: We are in prom­ising talks with a renowned Anglo-​Saxon lit­ig­a­tion fin­an­cier and hope to be able to make a fin­an­cing of­fer in the com­ing weeks to all those in­vestors who can­not bear the ne­ces­sary costs them­selves. In any case, you can already re­gister with us free of charge HERE.