Over 100 cases rejected: Cheated Wirecard investors go away empty-handed

Over 100 cases rejected
Bounced Wirecard feeders go away empty-handed

By Thomas Steinmann

The EY auditors have attested Wirecard clean balance sheets for years. After the bankruptcy of the payment service provider from Munich, a special investigator attested serious errors to the auditors. Nevertheless, there is no compensation for aggrieved investors. You lose – a second time.

In the accounting scandal at Wirecard, numerous defrauded small investors who are suing the auditor EY failed with their lawsuits. As the Regional Court Munich I announced at Capital’s request, around 115 proceedings have currently been dealt with. In all known cases, the lawsuits against EY have been dismissed, said a spokeswoman. A total of around 650 lawsuits have been received since June 2020. The number is likely to increase, and investor law firms are currently working on further lawsuits. Some institutional investors have already announced that they will take action against EY.

The EY auditors had attested the payment service provider from Aschheim near Munich clean balance sheets for years – although there were repeated indications of irregularities and at times internal forensic experts also expressed concerns. When it turned out in the summer of 2020 that an alleged billion dollar fortune practically did not exist in Asia, the DAX company had to file for bankruptcy. Later, a special investigator on behalf of the Bundestag committee of inquiry confirmed that the auditors had serious errors. In the Wirecard complex, the Munich I public prosecutor is also investigating former EY examiners.

The Regional Court of Munich I justified its decisions to reject the claims of shareholders for damages in the previous proceedings with a formal argument, among other things: the investors could not prove that the certificates from EY were decisive for their purchase of Wirecard shares. In addition, no deliberate action on the part of the auditors can be determined.

Upon request, EY stated that its position was confirmed by the first-instance judgments: “There are no claims against EY for damages.” In principle, one cannot comment on specific questions about the lawsuits.

“Jurisprudence is anti-consumer”

Investor lawyers expressed sharp criticism of the decisions and the handling of the judiciary with the cheated small shareholders. “When courts demand that investors have to prove that they have read attestations and made them the basis for their decisions, then this is a case law that is friendly and consumer-hostile, especially for institutional investors,” said capital market expert Marc Liebscher from the Berlin law firm Dr . Späth und Partner, who represents several hundred Wirecard victims.

In addition, Liebscher criticized the fact that the Munich judges set up numerous hurdles for small investors in the proceedings. Online negotiations are hardly possible, and the judges also ordered that plaintiffs must appear in court. The once hyped company also invested many small savers who had little experience in the stock market and who had bought the paper as a retirement plan.

“One gets the impression that the judges want to make the lawsuits as uncomfortable as possible,” said lawyer Liebscher. This may be “self-defense” in view of the large number of procedures. “Those who suffer are the investors,” said Liebscher. After years of failure by the supervisory authorities at Wirecard, they would now be “left alone by the state for a second time”.

Model lawsuits are not possible

When asked, a court spokeswoman said that “some of the proceedings” had actually been negotiated online. Exact numbers are not available. The spokeswoman confirmed that some chambers had ruled that the plaintiffs could not be represented by their lawyers. The background is that the plaintiffs “should be heard for informational purposes,” said the spokeswoman. According to her information, nine different chambers are dealing with the lawsuits against EY at the Munich I Regional Court.

At Wirecard, for formal reasons, investors cannot take legal action against EY in accordance with the Investor Model Procedure Act, which enables proceedings to be bundled and thus relieves the courts. The background to this is that this case is not about possibly incorrect capital market information from an issuer of a share.

In addition to the representatives of small shareholders, institutional investors such as the DWS fund company had also announced lawsuits against EY. Commerzbank, which was the lead manager for a large loan to Wirecard, also wants to take action against the auditing company. However, no lawsuit has yet been filed by DWS, or by Wirecard’s insolvency administrator Michael Jaffé. Possible claims against the auditing company will not expire until 2023. Unlike small shareholders, professional investors should find it easier to prove that they have analyzed the attestations and taken them into account in their investment decisions. In the end, it is likely that the Federal Court of Justice will have to decide whether there are claims for damages against EY.

The article first appeared at Capital.de

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