Saturday, December 12, 2020

A $2 Billion hole in the balance sheet

LEADER OF GERMAN AUDIT WATCHDOG CAUGHT TRADING IN WIRECARD SHARES BEFORE COLLAPSE

Tyler Durden's Photo
BY TYLER DURDEN
SATURDAY, DEC 12, 2020 - 11:50

When Wirecard collapsed back in June and and investors suddenly realized that all of those reports about widespread accounting fraud were accurate - and not a ploy cooked up by some desperate short-seller, as BaFin, Germany's market regulator, had suggested - investors turned to the German government, and they were all asking the same question.

How did regulators let this happen? It seemed almost unbelievable that the German government would so brazenly protect an unprofitable fraud, saying nothing even when the company took Commersbank's place on the DAX, or when a hoped-for merger with fellow German champion Deutsche Bank fell apart for reasons that were unclear (though that soon changed). As with all frauds, reality cannot be forestalled forever. And so with Wirecard, the truth was finally exposed when a special audit exposed a $2BN hole in Wirecard's balance sheet.

As German lawmakers investigate regulators' failings, they've discovered that a top official with Germany's top audit watchdog traded in Wirecard shares in the months before the company's collapse, behavior that "smacks of insider trading".


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