German financial regulator stops shorting of Wirecard shares
The investigation into Wirecard’s accounting took a new twist when the German financial regulator banned the shorting of the fintech firm’s shares.
As you probably know, shorting is when an investor borrows shares and immediately sells them, intending to get them later at a lower price – and then return them to the lender and profit from the difference.
Today (18 February), Germany’s Federal Financial Supervisory Authority (BaFin) issued a General Administrative Act prohibiting with immediate effect the establishment of net short positions in shares of Wirecard and increases in existing net short positions.
This applies until 18 April 2019, and BaFin says it does not matter whether the shares covered by the act are traded in Germany or abroad.
The regulator gave its reasons – namely that shorting could be a “serious threat to market confidence” in Germany.
This development follows on from earlier this month. To keep it brief, Wirecard told investors that an external law firm has been investigating alleged accounting manipulations by “a member of Wirecard’s finance team” in its Singapore operations since May 2018.
Wirecard commented: “The allegations related to potential compliance breaches in the area of accounting for the period 2015-18 totalling revenues of €6.9 million and costs of €4.1 million as well as an internal transfer of software intellectual property valued at €2.6 million.”
The company expects a final conclusion of the external investigation “in the very near future” and promised analysts that it would provide “full transparency of the results of the investigation”.
In fact, Wirecard’s share price have dropped 40% between 30 January and 15 February.
FinTech Futures has contact Wirecard for its comments on this latest BaFin matter.