May 20, 2022
Wirecard

In Germany, investors are targeting the parent company of a fintech startup, Wirecard, for 1.5 billion euros in compensation. The company has been operating since 1999, processing payments for gambling and pornographic websites, but recently filed for bankruptcy due to a $1.9 billion hole in its account. Despite its success, the company has been plagued by fraud, which EY blames on a complex global scheme.

A European investor group, Better Finance, is helping 30K stakeholders recover the money they lost when Wirecard collapsed, setting up a foundation under Dutch law. They are targeting the global parent company EY, which audited Wirecard’s books. They are hopeful that the foundation will be able to reach a settlement with EY Global. This foundation is backed by DSW, a German investor group.

The company has been hit by several scandals since its inception, which reached their peak in 2019. The Financial Times published whistleblower complaints and internal documents that were found to contain evidence of fraud. Eventually, the company filed for insolvency on 25 June 2020, but not before its investors began to demand 1.5 billion euros in compensation. Its CEO, Markus Braun, and other corporate officers have been terminated and their positions are under investigation.

If the global parent and EY in Germany fail to settle in a civil manner, the company will take the case to court. Lawyers for the investors are expecting a three to four-year litigation. As a matter of fact, EY has not responded to the lawsuit. But if a peaceful settlement is not possible, Wirecard investors plan to sue EY parent for 1.5 billion euros in compensation.