FAQ on the Wirecard Scandal: Lawsuit against EY

Fre­quently asked ques­tions on the Wir­e­card scan­dal and the claims for dam­ages against the in­volved aud­it­ors Ernst & Young (EY):

Wirecard EY

Which in­vestors can claim dam­ages against EY?

All in­vestors af­fected by the Wir­e­card scan­dal who have in­ves­ted in shares of Wir­e­card AG to­gether with their de­riv­at­ives (e.g. war­rants w/​o knock-​out threshold, cer­ti­fic­ates, con­tracts for dif­fer­ence) and/​or bonds is­sued by Wir­e­card AG.

Please note that you must have pur­chased Wir­e­card shares between Janu­ary 1, 2010 and mid­night on June 17, 2020. The de­cis­ive factor here is the time of the placed or­der, even if the book­ing in the se­cur­it­ies ac­count was made later.

If you only ac­quired your shares after Wir­e­card AG is­sued the press re­lease at around 11 a.m. on June 18 to the ef­fect that EY would re­fuse to is­sue the audit cer­ti­fic­ate, the ques­tion whether you can suc­cess­fully par­ti­cip­ate in a law­suit against EY de­pends on your per­sonal and cred­ible level of knowledge.

Why is ac­tion be­ing taken against EY and not against Wir­e­card itself?

Based on the cur­rent situ­ation, a law­suit against EY seems most prom­ising. In prin­ciple, a law­suit against Wir­e­card AG is pos­sible and prom­ising, but we do not be­lieve that it is eco­nom­ic­ally prom­ising due to the risk of in­solv­ency. Moody’s has already de­val­ued the com­pany at a junk level. Nev­er­the­less, we are also con­sid­er­ing this op­tion for you.

Up­date: Wir­e­card AG filed for bank­ruptcy on June 25, 2020 – thus, it fails as a solvent coun­ter­party for the suc­cess­ful en­force­ment of pos­sible claims for dam­ages by investors!/span>

On what legal basis can dam­ages be claimed from EY?

Our law­suit against EY is es­sen­tially based on the cir­cum­stance of miss­ing bal­ance con­firm­a­tions and the is­su­ance of a culp­ably false audit cer­ti­fic­ate for the con­sol­id­ated fin­an­cial state­ments of Wir­e­card AG. EY is there­fore li­able to in­vestors for in­ten­tional im­moral dam­age in ac­cord­ance with Sec­tion 826 of the Ger­man Civil Code (BGB) and in ac­cord­ance with the prin­ciples of the agree­ment with pro­tect­ive ef­fects in fa­vour of third parties in ac­cord­ance with Sec­tion 311 (3) of the Ger­man Civil Code (BGB).

What is the li­ab­il­ity amount of EY?

EY has lim­ited its li­ab­il­ity to­wards its con­tract­ors for its re­spect­ive activ­it­ies there. How­ever, this does not af­fect li­ab­il­ity in the ex­ternal re­la­tion­ship, and is there­fore ir­rel­ev­ant to an ac­tion for dam­ages brought by the in­vestor due to the is­sue of a culp­ably false audit cer­ti­fic­ate for the con­sol­id­ated fin­an­cial state­ments of Wir­e­card AG.

Since we as­sume that the dam­age was caused in­ten­tion­ally, it is not to be ex­pec­ted that EY’s in­sur­ance com­pany will have to pay for the dam­age. How­ever, since EY achieved a turnover of over 2 bil­lion euros in Ger­many alone last year and is also part of the in­ter­na­tional EY Global group of com­pan­ies, leg­ally ex­ist­ing claims for dam­ages will also be eco­nom­ic­ally enforceable.

How do you con­sider the chances of suc­cess of the law­suits against EY?

We con­sider the chances of suc­cess of our law­suits against EY to be good – the un­der­ly­ing facts (the miss­ing bal­ance con­firm­a­tions) are not in ques­tion. In ad­di­tion, we as­sume that fur­ther de­faults by EY will be un­covered, which will sup­port our law­suit. We have already com­piled ex­tens­ive ma­ter­ial on this matter.

What is your pro­cess strategy?

Schirp & Part­ner, in co­oper­a­tion with at­tor­ney Dr. Marc Lieb­scher, is seek­ing to file fur­ther law­suits against EY and to ob­tain lit­ig­a­tion fin­an­cing for those in­vestors who so desire.

Wouldn’t the BaFin or the FREP also come into ques­tion as suit­able claimants for dam­ages actions?

Yes, how­ever, a law­suit against the Ger­man Fed­eral Fin­an­cial Su­per­vis­ory Au­thor­ity (Bafin) and/​or the Ger­man Fin­an­cial Re­port­ing En­force­ment Panel (FREP/DPR) is the leg­ally less cer­tain way than a law­suit against EY.

How­ever, a law­suit against BaFin/​DPR is re­com­men­ded for all in­jured parties who do not wish to take ac­tion against EY for eco­nomic or per­sonal reas­ons (e.g. be­cause the legal ex­penses in­sur­ance ex­cludes the entry in cases of cap­ital in­vest­ments but at the same time cov­ers state li­ab­il­ity, or be­cause the in­jured party is him­self an em­ployee of EY).

Please note that in any event it would be ne­ces­sary to file two sep­ar­ate ac­tions, as they are based on dif­fer­ent bases of claim and the re­spect­ive jur­is­dic­tions are not identical.

Is the fil­ing of an ac­tion un­der the KapMuG or a model de­clar­at­ory ac­tion planned?

Due to cost-​benefit con­sid­er­a­tions, we are cur­rently not plan­ning to file a law­suit un­der the KapMuG (Cap­ital In­vestor Model Case Act) or a model de­clar­at­ory ac­tion, but are pre­par­ing sev­eral class ac­tions for filing.

Does the sale of my Wir­e­card AG se­cur­it­ies af­fect the claim for damages?

You are free to de­cide whether to sell or hold shares/​bonds/​derivatives of Wir­e­card AG. This is ir­rel­ev­ant for the law­suit. A sale that has already taken place or is cur­rently tak­ing place has no ef­fect; any pro­ceeds achieved are only to be taken into ac­count in the amount of your loss. De­cis­ive for the claim for dam­ages is the ex­act time at which the se­cur­it­ies were held. Please un­der­stand that we can­not make any re­com­mend­a­tion in this regard.

How is my dam­age re­spect­ively the amount in dis­pute cal­cu­lated in legal proceedings?

Your loss cor­res­ponds to the amount in dis­pute in the law­suit and is made up of the pur­chase value of your se­cur­it­ies, in­clud­ing ac­quis­i­tion costs and any com­mis­sions paid. To mit­ig­ate your loss, any di­vidends re­ceived and, if you have sold the se­cur­it­ies, the net pro­ceeds of the sale must be deducted.

How much are the lawyer’s fees and court costs in case of a lawsuit?

We will of­fer private in­vestors to par­ti­cip­ate in a so-​called class ac­tion law­suit. In this law­suit, sev­eral plaintiffs are com­bined in one law­suit. This can con­sid­er­ably re­duce the amount of costs to be borne in the event of de­feat. The lit­ig­a­tion cost risk in the event of a de­feat is made up of the company’s own legal costs, the op­pos­ing party’s legal costs and the court costs. The costs are based on the Ger­man Law­yers’ Fees Act and your in­di­vidual loss. Please con­tact us without ob­lig­a­tion so that we can in­form you about your risk of legal costs. 

In ad­di­tion, we are in ne­go­ti­ations with vari­ous lit­ig­a­tion fin­an­ci­ers. A lit­ig­a­tion fin­an­cier would bear the cost risk for you (if your case would be taken over) and in re­turn, how­ever, would re­tain a cer­tain per­cent­age of the sum ob­tained for you in the event of a suc­cess­ful out­come; this is usu­ally one third.

If you already had legal ex­penses in­sur­ance at the time of the in­vest­ment and the in­sur­ance also cov­ers dis­putes in the cap­ital mar­ket, we will sub­mit a cover re­quest free of charge.

The se­cur­it­ies ac­count is man­aged out­side Ger­many or I am not a Ger­man cit­izen – can I still par­ti­cip­ate in the class action?

Yes. Claims for dam­ages ex­ist re­gard­less of the dom­i­cile of the cus­todian bank or the na­tion­al­ity of the se­cur­ity holder and can be as­ser­ted in Germany.

I am already su­ing Wir­e­card AG and am rep­res­en­ted by an­other law firm – can I still or ad­di­tion­ally par­ti­cip­ate in the class ac­tion against EY?

Yes, that is pos­sible. How­ever, you should bear in mind that this may res­ult in double fees. In the event of win­ning the case, how­ever, the dam­age will in prin­ciple only be com­pensated once.

I want to sue EY. What doc­u­ments do I have to submit?

Please send us all pur­chase state­ments for your shares/​derivatives/​bonds. If you have sold se­cur­it­ies in the mean­time, we need the re­spect­ive sales state­ment. We also need the signed man­date doc­u­ments (man­date con­tract with re­mu­ner­a­tion agree­ment, power of at­tor­ney, re­voc­a­tion in­struc­tions). These doc­u­ments are avail­able for down­load here.

Form Class Ac­tion Lawsuit »

How to reach us

Schirp & Part­ner Recht­san­wälte mbB
Leipzi­ger Platz 9
10117 Ber­lin, Germany

Phone: +49 (0)30 – 327 617 0
Fax: +49 (0)30 – 327 617 17
E-​Mail: mail@​schirp.​com

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