European Investors-VEB summons auditing firm EY in Germany before a Stuttgart court for its role in the Wirecard scandal.
EY has been Wirecard AG’s independent external auditor for years. European Investors-VEB believes that the firm’s audit procedures qualify as manifest violations of the auditor’s duty of care.
In particular, European Investors-VEB focuses on EY’s conduct as from 28 April 2020, following the publication of the special audit report by KPMG Accountants and the public statements made by Wirecard’s CEO Mr Braun afterwards. European Investors-VEB asserts that by failing to respond publicly at that time, EY intentionally manipulated prices.
Within this context, the question arises as to the protective nature of the prohibition of market manipulation by third parties and the obligation to pay damages possibly ensuing from such manipulation. In Germany, this question is the subject of debate, whereas, in other European countries, this can naturally be attributed to EY that has made incorrect or incomplete statements
Compensation and corporate governance
European Investors-VEB, representing duped Wirecard investors, has requested the court not only that EY be ordered to pay damages but also that a judgment in principle be issued about the role of the auditor as a trusted adviser for society. Moreover, it is of the utmost importance that the crisis at Wirecard be used for a debate on fundamental improvements to corporate governance in Germany. Paul Koster, CEO of European Investors-VEB:
“European Investors-VEB wishes to receive an opinion from the German court about the question whether the fact that auditing firm EY has intentionally remained silent about the truth results in liability and the obligation to pay damages in respect of duped Wirecard investors.
However, for European Investors-VEB, this case is about more than just compensation, however important compensation is for the duped investors. It is also about more than an auditing firm defending itself publicly with its own incompetence. The core question is whether EY, in its capacity as an independent external auditor, has seriously harmed the interests of investors and other stakeholders in Germany owing to its years of failing audits and keeping silent about whether the financial statements for 2019 would be signed off or not. It also calls into question the accuracy of the preceding financial statements.”