100 billion payment giants burst into financial fraud, and the stock price suddenly plummeted by more than 80percent

category:Finance
 100 billion payment giants burst into financial fraud, and the stock price suddenly plummeted by more than 80percent


Earlier today, the company said the euro1.9 billion in cash in question reported by Ernst & Young last week was likely to be non-existent at all.

On Thursday, wirecard revealed that 1.9 billion euros of cash had disappeared from its trust account and was unable to provide evidence of its existence to Ernst & young, its auditor. The company said the money in question accounted for nearly a quarter of its total balance sheet.

The company also said there were signs that the trustee had provided the auditor with a false balance confirmation to deceive the auditor and create a false perception of such cash balances. At present, the companys management is trying to clarify the situation with ey.

As a result, the audit results for fy2019, which were scheduled to be released on Thursday, were delayed. The company said that if it was unable to provide audit results on June 19 local time, it may be required to prepay its 2 billion euro loan.

1.9 billion euros disappeared and wirecard was deeply involved in the false accounting scandal. On Thursday, the stock plummeted more than 62%, the biggest one-day decline in history.

In fact, in September 2018, the market value of wirecard once reached 24.6 billion euros (about 195.1 billion yuan), which replaced the German commercial bank in the DAX index of Germany, alongside Volkswagen, Siemens, Deutsche Bank and other giants.

As of June 18, the market value of wirecard has declined by 83%, leaving only 2.068 billion euros, 10.8 billion euros (85.6 billion yuan) less than the total market value of 12.9 billion euros on June 17.

KPMG warned two months ago

Ernst & Young is not the first accounting firm to find wirecards earnings questionable.

On April 27, 2020, KPMG, one of the four largest international accounting firms in charge of wirecard audit, issued the final audit report. In this report, KPMG did not give a final assurance signature on the authenticity of wirecards financial statements, because the accounting firm was unable to confirm a 1 billion euro acquisition payment.

Hit by KPMGs audit report, wirecards shares fell 26% on April 28, and continued to fall 6% on April 29.

But Markus Braun, then CEO of the company, said in an interview that KPMGs audit had no evidence that wirecards account had been falsified.

Most of the shares held by the former CEO were forced to close out

Wirecards share price plummeted for two days in a row, and Markus Braun, the chief executive of the company for 18 years, resigned on the 19th, with immediate effect.

Most of the wirecard shares held by the recently resigned CEO are being closed, people familiar with the matter said Tuesday.

Braun, who owns 7% of wirecard, is the companys largest shareholder, according to wind.

At the end of 2017, Braun received a loan secured by 4.2 million shares, almost half of his own, according to a regulatory document, Bloomberg reported.

It is understood that Braun used 392 million euros worth of shares in his 2017 mortgage. After last weeks slump, the value fell to 108 million euros at Fridays close, just 27% of that years value.

This led to speculation that Brauns shares were flattened.

Braun declined to comment as of the time of the release.

Soft silver steps on thunder again

In April 2019, Softbank acquired 5.6% of wirecards shares at a price of 130 euros per share through a subsidiary using convertible bonds. The transaction cost 900 million euros (about $1 billion).

Short sellers make 18.5 billion in two days

The German monetary authority once banned short selling

Before the wirecard scandal, wirecard was already one of the most short listed stocks.

In January 2019, the Financial Times reported that preliminary investigation found that the German financial technology group had falsified documents and accounting irregularities in several subsidiaries in Asia. After the report was released, Singapore police searched the companys office, and wirecard shares fell sharply.

While wirecard has repeatedly denied wrongdoing, investors have increased their bets on the stocks decline. According to ihsmarkit, as of mid February 2019, the share had a short net ratio of about 14%, the highest level since mid-2017.

Because of short selling, the companys share price fell more than 30% from the end of January to the middle of February, so the German monetary authority sold.

Bafin said on its website on February 18 that global investors would be immediately prohibited from creating new short positions or increasing existing short positions in wirecard before April 18, which is the first time that Germany has banned short selling of a single stock. During the financial crisis, regulators banned naked short selling of 11 financial companies.

In 2018, wirecard surpassed Deutsche Bank in market value and replaced Commerzbank in Germanys famous DAX30 index.

Although the German monetary authority once banned shorting of wirecard, it failed to reduce investors enthusiasm for shorting the companys shares. John Hempton, founder of Bronte capital, an Australian hedge fund, said they had been shorting the stock for 10 years. During this time, he watched wirecards share price rise from less than 7 euros to 200 euros at its peak in 2018. But by the end of last Friday, the stock had fallen to 25.82 euros. Short sellers have made $2.6 billion (18.5 billion yuan) from the stocks collapse in the past two trading days, according to financial analysis firm s3partners. Read the annual report of Zhongtai Motor Co., Ltd. in which more than 10 financial institutions were involved in the bankruptcy and reorganization of the operator of 5A scenic spot Yesanpo: in 2019, the net profit loss was 11.19 billion yuan, Ma Huatengs fortune soared, only three months later, Tencents market value increased by one millet + meituan. Source: China Fund News, editor in charge: Zhong Qiming_ NF5619

Although the German monetary authority once banned shorting of wirecard, it failed to reduce investors enthusiasm for shorting the companys shares.

John Hempton, founder of Bronte capital, an Australian hedge fund, said they had been shorting the stock for 10 years. During this time, he watched wirecards share price rise from less than 7 euros to 200 euros at its peak in 2018.

Short sellers have made $2.6 billion (18.5 billion yuan) from the stocks collapse in the past two trading days, according to financial analysis firm s3partners.