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Several charged over Wirecard market manipulation

Alexander Pearson
April 16, 2019

An unspecified number of people are suspected of trying to manipulate Wirecard's shares to benefit so-called short-sellers. Wirecard's share price collapsed earlier this year after its Asian units were accused of fraud.

Image: Reuters/W. Rattay

Germany's financial market regulator filed charges against multiple people for allegedly trying to manipulate the share price of payment services provider Wirecard AG.

The Federal Financial Supervisory Authority (BaFin) opened a probe into the matter after the German company's stock fell 40 percent in late January in response to several Financial Times articles that accused Wirecard of fraud.

What you need to know:

  • BaFin confirmed to DW that it had filed the charges with prosecutors in the southern city of Munich. Der Spiegel magazine first reported on the filing.
  • A spokeswoman at the watchdog said the suspects were accused of trying to manipulate Wirecard's share price as part of a "short attack." She did not provide any details on their identity.
  • Der Spiegel reported that BaFin had targeted a dozen people, including journalists at the Financial Times.
  • The regulator's probes into "other potential attempts to manipulate Wirecard AG shares are continuing," the spokeswoman said.

Read more: Wirecard: Why the German digital payment firm is under fire

What happened to Wirecard's share price? It entered a downward spiral after the Financial Times ran a series of articles that accused the company's Asian offices of artificially inflating profits by shuffling cash between themselves — a scheme known as "round-tripping." The paper reported that two Wirecard executives were aware of the fraud. The company denied any knowledge of the scheme and an independent audit cleared the company of criminal liability.

Regulators enter the fray: BaFin and its European counterpart, the European Securities and Markets Authority (ESMA), banned short-selling of Wirecard's stock on February 18 amid fears that it could harm the broader market. It was the first time BaFin had issued a ban on a single company's stock.

What does Wirecard do? Based in Munich, Wirecard offers payment services for banks and other types of financial institutions. The company's stock price soared in 2018, pushing Germany's second-largest lender, Commerzbank, out of the DAX in September.

What is short-selling? It's a type of trade that bets on a share price dropping in the near future. Short-sellers borrow shares from a lender and sell them, usually having committed to return the share at a fixed point in the future. If the share price then falls, the short-seller can re-buy the shares, give them back to the lender, and keep the difference. 

Banking upheaval: Commerzbank exits DAX

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