Some corporate scandals fade from the headlines faster than others. Just to refresh your memories, here’s the state of play in the Wirecard debacle.
We know one thing for sure: the Wirecard case is not done yet. European Investors-VEB currently conducts a trial-case, the investors’ association having purchased one individual retail investor’s claim. The legal proceedings are founded on that single claim, should this augur well, claims from other injured investors may be onloaded.
On 10 August 2020 European Investors-VEB launched a lawsuit against the German establishment of audit firm EY asserting a claim for damages incurred by investors, caused by the pipe-dream of multiple billions for years sustaining the erstwhile German fintech miracle.
The Bavarian Wirecard went bust in 2020 upon a bookkeeping fraud for many years, accompanied by grossly failing supervision. The top executive of the German financial markets watchdog has had to quit due to the affair, as EY Germany’s former chief executive also saw fit to take his leave. Wirecard’s ex-CEO Markus Braun is in custody awaiting his trial and former board member Jan Marsalek is on the run.
Auditors EY stood there and let it happen, or – even worse – intentionally turned a blind eye. EY thereby takes responsibility for a fraud of unprecedented proportions far too late coming to light.
Read more about the Wirecard case here.
European Investors-VEB asserts that EY’s course of action from 28 April 2020, upon the release of the special audit report by KPMG forensic auditors and the public statements from former CEO Markus Braun, fell grossly short. By failing to respond publicly at that time, EY intentionally manipulated prices.
European Investors-VEB, requests the court not only that EY be ordered to pay damages to investors, but also that a judgment in principle be issued on the role of the auditor as a trusted adviser for society.
The proceedings are before the district court in Münich. This has scheduled oral hearings in our case for 17 January 2021.
The disclosure of the ‘Wambach Report’ through the doings of Handelsblatt, is an important catalyst. The findings are damning where EY is concerned: EY intentionally neglected essential audit procedures. EY has resisted this Report coming out in the open, arguing it would expose trade and business secrets. The German Parliamentary Enquiry Commission had based its conclusions on the Wirecard case essentially on the Wambach Report.