FAQ on the Wirecard Scandal: Lawsuit against EY

Yes, this is still pos­sible and sens­ible des­pite the ini­ti­ated KapMuG (model) pro­ceed­ings, as oth­er­wise there is a risk of a con­sid­er­able loss of time.

Your law­suit will be sus­pen­ded dur­ing the on­go­ing model pro­ceed­ings and you will be in­volved in the design pro­ceed­ings as a party. Once the pro­ceed­ings have been fi­nally ter­mint­ated, they will be re­sumed and con­tin­ued. In this case, the model de­cision has a bind­ing effect.

All shares, de­riv­at­ives and bonds pur­chased between 01.01.2010 and 22.06.2020.

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.

The risk of legal costs in the event of los­ing the case con­sists of your own legal fees, the op­pos­ing party’s legal fees and the court costs. The costs are based on he Ger­man Law­yers’ Fees Act (Recht­san­walts­ver­gü­tungs­ge­setz) and your in­di­vidual dam­ages. Con­tact us without ob­lig­a­tion so that we can in­form you about your legal costs risk.

If you were already in­sured for legal ex­penses at the time of the in­vest­ment and your in­sur­ance also cov­ers dis­putes in the cap­ital mar­ket, we will sub­mit a cov­er­age re­quest for you free of charge.

Wir­e­card AG filed for in­solv­ency on June 25, 2020 – there­fore it is no longer a solvent claimant for the suc­cess­ful en­force­ment of any claims for dam­ages by investors.

Our claim against EY is es­sen­tially based on the fact of miss­ing bal­ance con­firm­a­tions and the is­su­ance of a culp­ably in­cor­rect audit opin­ion for Wir­e­card AG’s con­sol­id­ated fin­an­cial state­ments. EY is there­fore li­able to the in­vestors for in­ten­tional im­moral dam­age un­der § 826 of the Ger­man Civil Code (BGB) and un­der the prin­ciples of a con­tract with pro­tect­ive ef­fects in fa­vor of third parties un­der § 311 (3) of the Ger­man Civil Code (BGB).

We con­sider the pro­spects of suc­cess of our law­suits against EY to be good. The mem­bers of the In­vest­ig­at­ive Com­mit­tee made it clear that they were un­an­im­ous in their view that EY should have in­sisted on the sub­mis­sion of bal­ance con­firm­a­tions from the account-​holding banks when audit­ing Wirecard’s fin­an­cial state­ments. This view was shared not only by the aud­it­ors of the watch­dog (APAS) at the Fed­eral Min­istry of Eco­nom­ics and Tech­no­logy, but also by the Ger­man Fed­eral Gov­ern­ment (in an in­quiry by a mem­ber of the In­vest­ig­at­ive Com­mit­tee) and the In­sti­tute of Pub­lic Aud­it­ors in Ger­many (IDW).

In ad­di­tion, fur­ther fail­ures by EY sup­port our com­plaint – we have already com­piled ex­tens­ive ma­ter­ial on this.

EY has lim­ited its li­ab­il­ity to its con­tract­ors for their re­spect­ive activ­it­ies there. How­ever, this does not af­fect the li­ab­il­ity in the ex­ternal re­la­tion­ship, i.e. it is ir­rel­ev­ant for an ac­tion for dam­ages by the in­vestor due to the is­su­ance of a culp­ably in­cor­rect audit opin­ion for the con­sol­id­ated fin­an­cial state­ments of Wir­e­card AG.

Since we as­sume that the ac­tions were in­ten­tional, it is not to be ex­pec­ted that EY’s in­sur­ance com­pany will have to pay for the dam­age in­curred. How­ever, since EY was able to gen­er­ate over 2 bil­lion euros in sales in Ger­many alone last year and is also part of the in­ter­na­tional EY-​Global group of com­pan­ies, we ex­pect that leg­ally ex­ist­ing claims for dam­ages will also be eco­nom­ic­ally enforceable.

On the basis of the cost-​benefit ana­lysis, we are com­bin­ing sev­eral plaintiffs into one law­suit each and fil­ing a class ac­tion for them by way of “sub­ject­ive ag­greg­a­tion of claims”. Sub­ject­ive ag­greg­a­tion means that sev­eral plaintiffs pur­su­ing the same cause of ac­tion can go to court to­gether. In other words, they are groups of plaintiffs, so to speak. The con­di­tions for this are met in the case of EY. Be­cause the court cost reg­u­la­tions are de­signed to be de­gress­ive, cost ad­vant­ages can be achieved with this ap­proach. We there­fore form such groups on an on­go­ing basis.

For those with legal ex­penses in­sur­ance, we re­com­mend an in­di­vidual lawsuit.

Our legal basis: BGH, Urt. v. 12.03.2020 – VII ZR 236/19. In this rul­ing, the Fed­eral Court of Justice cla­ri­fied that an aud­itor is li­able to in­vestors if his audit opin­ion is in­cor­rect and if he has ac­ted “neg­li­gently”, “reck­lessly” and “con­science­less in view of the sig­ni­fic­ance for thirs parties” in do­ing so. We be­lieve that these con­di­tions are met in the case of Wir­e­card and EY and that we can prove this.

The DSW (Deutsche Schutzver­ein­i­gung für Wer­t­papi­erbesitz e.V.) to­gether with the law firms Nied­ing + Barth (Frank­furt am Main) and AKD Be­ne­lux Law­yers (Am­s­ter­dam), which spe­cial­ize in cap­ital mar­ket law, has es­tab­lished the “Sticht­ing Wir­e­card In­vestors Claim” found­a­tion, which is based in Am­s­ter­dam and aims to achieve com­pens­a­tion for Wir­e­card in­vestors within the EU. The goal be­hind it: To reach a set­tle­ment not only with EY Ger­many, but also with EY Global.

Un­der Dutch law, claims can be brought dirextly against the par­ent com­pany in ad­di­tion to the com­pany con­cerned, so ac­tion against EY Global is pos­sible here. Ul­ti­mately, it is the Dutch found­a­tion that sues, and all oth­ers join the ac­tion free of charge, sim­ilar to a US-​style class ac­tion. The bar of proof does not seem to hang quite as high in the Neth­er­lands as in Ger­many, so the chances of suc­cess seem to be bet­ter and the dur­a­tion of pro­ceed­ings usu­ally shorter.

How­ever, in our opin­ion, the claims situ­ation against EY Global is lack­ing. The ques­tion of on what legal basis claims can be lit­ig­ated re­mains open here. In ad­di­tion, no breach of dury is apar­ent with re­gard to EY Global. Fur­ther­more, it is ques­tion­able whether Global had a duty to mon­itor or su­per­vise (at least un­der Ger­man law).

In ad­di­tion, it can­not be as­sumed that EY should now aban­don its “hard line” – namely to strictly re­ject all set­tle­ment pay­ments to date.

We there­fore con­sider this op­tion to make little sense and con­tinue to re­com­mend tak­ing legal ac­tion against EY Ger­many. If the set­tle­ment op­tions fail, the only re­main­ing op­tion is to file a law­suit against EY Ger­many be­fore the statue of lim­it­a­tions ex­pires on Decem­ber 31, 2023.

You are free to de­cide whether to sell or hold the shares/​bonds/​derivates of Wir­e­card AG. This is ir­rel­ev­ant for the claim. 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 dam­ages. De­cis­ive for the claim for dam­ages is at what point in time ex­actly the se­cur­it­ies were held. Please un­der­stand that we can­not make any re­com­mend­a­tions in this regard.

Your dam­ages cor­res­pond to the amount in dis­pute in the legal ac­tion and con­sist of the pur­chase value of your se­cur­it­ies in­clud­ing ac­quis­i­tion costs and any com­mis­sions paid. Any di­vidend pay­ment re­ceived and, if you have sold the se­cur­it­ies, the net pro­ceeds from the sale must be de­duc­ted from this amount to re­duce the damages.

We of­fer in­sti­tu­tional and private in­vestors the op­por­tun­ity to par­ti­cip­ate in a class ac­tion law­suit. In this case, sev­eral plaintiffs are com­bined in one ac­tion. In this way, the amount of costs to be borne in the event of los­ing the case can be sig­ni­fic­antly re­duced. The risk of lit­ig­a­tion costs in the event of los­ing the case is made up of the plaintiff’s own attorney’s fees, the op­pos­ing attorney’s fees and the court costs. The costs are based on the Ger­man Lawyer’s Fees Act (Recht­san­walts­ver­gü­tungs­ge­setz) and your in­di­vidual dam­ages. Con­tact us without ob­lig­a­tion so that we can in­form you about your legal costs risk.

If you were already covered by legal ex­penses in­sur­ace at the time of the in­vest­ment and your in­sur­ance also cov­ers cap­ital mar­ket dis­putes, we will sub­mit a cov­er­age re­quest for you free of charge.

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.

No! If you have already filed a law­suit, a KapMuG filin is un­ne­ces­sary, since as a plain­tigg in a sus­pen­ded law­suit you are a party to the model pro­ceed­ings un­der KapMuG.

There is no way around fil­ing a law­suit, even if you only file your claims for the KapMuG pro­ceed­ings for the time be­ing. Fil­ing for KapMuG pro­ceed­ings only post­pones the time which the ac­tion is filed. This is be­cause after the KapMuG pro­ceed­ings have been suc­cess­fully con­cluded, every ap­plic­ant for the KapMuG pro­ceed­ings must still fila a law­suit in or­der to as­sert his or her claims. How­ever, any­one who does not file suit un­til after the con­clu­sion of the model pro­ceed­ings thus loses valu­able time. We there­fore ad­vise fil­ing an ac­tion now and thus be­com­ing a party to the model proceedings.

In prin­ciple, only in­vestors who are not already parties to the KapMuG pro­ceed­ings by vir­tue of hav­ing filed their own law­suit may re­gister for the KapMuG pro­ceed­ings. By fil­ing for KapMuG pro­ceed­ings, the stuatue of lim­it­a­tions is merely sus­pen­ded without any fur­ther ex­am­in­a­tion of the filed claim by the court. How­ever, with regad to the Wir­e­card model pro­ceed­ings, there is a risk that the claims for dam­ages against EY could not be filed in or­der to sus­pend the stat­ute of lim­it­a­tions be­cause they are not yet the sub­ject of the test case.

The pur­pose of the model pro­ceed­ings is to bundle all pending law­suits in or­der to pre­vent di­ver­gent de­cisions and to re­lieve the courts of ap­peal. All pending law­suits against EY will be sus­pen­ded and the plaintiffs will be parties to the model pro­ceed­ings as de­fend­ants. All ac­tions that are newly filed dur­ing the on­go­ing model pro­ceed­ings will be stayed and the plain­tifs will also be­come parties to the model proceedings.

After the court has de­term­ined the model plaintiff from the sus­pen­ded pro­ceed­ings, all those who have not filed a law­suit can re­gister their claims with a period of 6 months. How­ever, these ap­plic­ants do not thereby be­come parties to the model proceedings.

In the course of the model pro­ceed­ings, the cent­ral is­sues that af­fect all in­vestors equally are the cla­ri­fied in ac­cord­ance with the re­ques­ted de­clar­at­ory ob­ject­ives and de­cided by the model de­cision. In ad­di­tion, the Cap­ital In­vestor Model Pro­ceed­ings Act provides for the pos­sib­il­ity of the parties (the de­fend­ants and the plaintiffs, but not the ap­plic­ants) to the model pro­ceed­ings con­clud­ing a settlement.

If no set­tle­ment is reached in the model pro­ceed­ings, an ap­peal on points of law may be lodged with the Fed­eral Court of Justice against the model de­cision. The sus­pen­ded law­suits of the in­di­vidual plaintiffs will only be re­sumed after the end of the model pro­ceed­ings with legal ef­fect. These will then ul­ti­mately only deal with the in­di­vidual as­pects of the law­suit, such as the cal­cu­la­tion of dam­ages in the spe­cific case. All find­ings from the pro­ceed­ings are bind­ing on the claimants as parties to the model proceedings.

Once the model pro­ceed­ings have be­come fi­nal, the claimants must as­sert their claims by fil­ing a law­suit. Only in the con­text of this ac­tion will it then be ex­amined whether the fil­ing of the claim has sus­pen­ded the stat­ute of lim­it­a­tions. In ad­di­tion, the find­ings from the test case are not bind­ing and must then be cla­ri­fied in the course of the legal action.

The or­der for ref­er­ence, which ini­ti­ates the model 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 Wirecard’s an­nual reports
• Wir­e­card was aware by 2015 at the latest that the trust ac­couunts did not show the pub­lished bank balances
• Markus Braun, as a mem­ber of the man­age­ment board, mis­rep­res­en­ted or con­cealed the company’s fin­an­cial situation
• By pub­lish­ing false an­nual re­ports, both Wir­e­card AG and Markus Braun ac­ted immorally
• EY’s li­ab­il­ity for dam­ages, in par­tic­u­lar cla­ri­fic­a­tion of in­tent with re­gard to aid­ing and abet­ting Wirecard’s breach of its dis­clos­ure obligations
• The price dif­fer­ence dam­age is com­pens­able without con­crete proof of causality

At present, we are un­able to provide you with any fur­ther fin­an­cing of­fer. The funds of our lit­ig­a­tion fin­an­cier have been ex­hausted. How­ever, we are in talks with other lit­ig­a­tion financiers.

The costs for fil­ing for KapMuG are by law a so-​called 0.8 lawyer’s fee and a 0.5 court fee. Here you will find an ex­em­plary cal­cu­la­tion and which doc­u­ments we need from you.

We of­fer you two op­tions for fil­ing your claims:

1. For a lump-​sum pay­ment of an ad­di­tional 100 euros on top of the stat­it­ory fees for fil­ing, we of­fer to send you an out-​of-​court let­ter writ­ten by our law firm to EY. This means that EY will be put “in de­fault” and you can ex­pect in­terest of five per­cent above the prime rate in ad­di­tion to a pos­sible claim for dam­ages. De­pend­ing on the dur­a­tion of the pro­ceed­ings, a sub­stan­tial sum could be ex­pec­ted here.
2. Should we file the ap­plic­a­tion on your be­half without no­tice of de­fault, you will in prin­ciple not be en­titled to any in­terest in ad­di­tion to the claim for dam­ages filed by you. In this case, we will merely re­gister your claim for the cap­ital in­vestor model pro­ceed­ings and charge you the stat­utory fee for this.

Two dif­fer­ent law firms may be act­ive for the Wir­e­card AG in­solv­ency pro­ceed­ings and the ac­tion against EY. Two dif­fer­ent law firms may also be act­ive for the in­solv­ency pro­ceed­ings and the KapMuG fil­ing. A KapMuG fil­ing and an ac­tion against EY are mu­tu­ally exclusive.

Yes, it is still pos­sible to file a claim in the in­solv­ency pro­ceed­ings. We of­fer to file this claim for you. This will in­cur a stat­utory fee of 0.5 imes the RVG fee plus ex­pensees and VAT. If de­sired, we will also take care of the cov­er­age re­quest vis-​à-​vis your legal pro­tec­tion insurance.

It makes sense to file these claims for dam­ages in the in­solv­ency pro­ceed­ings. Even if the in­solv­ency quota is not high, a cer­tain re­turn of cap­ital can hope­fully be achieved here. The claims for dam­ages are not easy to sub­stan­ti­ate in legal terms. It is there­o­fre ad­vis­able not to file them in the in­solv­ency pro­ceed­ings your­self, but to have them filed by a law firm.

The in­solv­ency ad­min­is­trator is Dr. Mi­chael Jaffé, whom we already know very well from an­other group of pro­ceed­ings (P&R Container).