Wirecard’s management board under investigation for market manipulation

In a statement on Friday, Munich prosecutors revealed to have searched the headquarters of the popular German payment processor, Wirecard (ETR: WDI). As per the prosecutors, the entire management board of Wirecard is now under investigation as part of BaFin’s (Germany’s financial regulator) market manipulation probe that it launched earlier this year.

Allegations against Wirecard include disclosure violations and accounting irregularities. The German financial services provider denies all allegations.

Shares of the company dropped about 3% in afternoon trading but regained the majority of the intraday loss before the market close on Friday. At £85.50 per share, Wirecard is roughly 15% down year to date in the stock market. Learn more about the capital markets.

Wirecard to completely cooperate with the investigation

According to the prosecutors, Wirecard may have been involved in fraudulent activities like providing misleading information to tamper with its stock price between 12^th March and 22^nd April. In an official statement on Friday, the payment processor pledged to fully cooperate with the ongoing investigation.

Wirecard’s management board also commented on the news and said:

“The board is optimistic that this matter will be resolved and that the accusations will be shown not to be founded.”

BaFin’s investigation seeks to find out if Wirecard deliberately provided incorrect information or perhaps withheld information to address allegations of market manipulation by the British newspaper, Financial Times.

KPMG fails to verify Wirecard’s financial reports

Following an independent audit, KPMG said on 28th April that it could not verify Wirecard’s financial reports that pushed the payments company into postponing the release of its performance results to 18^th June. KPMG failed to provide adequate documentation to address accounting irregularities and related allegations on Wirecard. Consequently, its stock sharply declined in the last week of April.

BaFin’s statement last week accentuated that CEO Markus Braun of Wirecard is being investigated on allegations of violating insider-trading rules. Braun is suspected of having purchased the company’s stock before the release of its annual report.

Founded in 1999, Wirecard has been a profitable business in the past two decades owing to an increase in online payments. The Aschheim-headquartered company serves as an acquirer and also issues payment cards (real and virtual) to its users.

At the time of writing, the German payment processor has a market cap of £9.79 billion and a price to earnings ratio of 24.47.