Brussels probes German regulator over Wirecard scandal

Agence France-Presse

This is AI generated summarization, which may have errors. For context, always refer to the full article.

Brussels probes German regulator over Wirecard scandal
(UPDATED) The European Securities and Markets Authority will examine whether Germany's regulatory responses to early signs that Wirecard was in trouble 'were adequate to protect investor confidence in EU securities markets'

BRUSSELS, Belgium (UPDATED) – The European Commission has asked the European Union (EU) financial authority to study whether German regulators were at fault in the buildup to the spectacular collapse of payments provider Wirecard.

According to a letter seen by Agence France-Presse on Friday, June 26, the Commission asked the European Securities and Markets Authority (ESMA) to carry out “a fact-finding analysis” and report back before July 15.

The study will examine whether Germany’s regulatory responses to early signs that Wirecard was in trouble “were adequate to protect investor confidence in EU securities markets.”

It will also ask “whether there is any evidence of administrative or legal obstacles that impeded the effective enforcement of applicable financial reporting requirements or, if relevant, the effective sanctioning of any breaches of such requirements.”

Wirecard filed for insolvency on Thursday, June 25, after admitting that 1.9 billion euros missing from its accounts likely does not exist, in what German Finance Minister Olaf Scholz dubbed an “unparallelled scandal.”

German Economy Minister Peter Altmaier has called for a thorough investigation and banking supervision chief Felix Hufeld has admitted that his watchdog – BaFin – “had not been effective enough to prevent something like this from happening.”

Now, the head of the European Commission’s directorate general for financial stability, John Berrigan, has tasked Steven Maijoor, head of the Paris-based ESMA, with conducting a parallel European probe.

“At this stage, this preliminary analysis should seek to establish a comprehensive description and assessment of the events, including the adequacy of the supervisory response to these events, leading to the collapse of Wirecard AG,” the letter says. 

“In my view it is essential that ESMA looks at the issue to ensure that EU investors are fully protected when investing in companies listed in a regulated market in the EU. This is also important to identify what next steps may be warranted.”

In an interview with the Financial Times that appeared on Friday, EU vice-president for financial services Valdis Dombrovskis said that, after ESMA reports back, Brussels could seek a legal investigation that could lead to a report demanding BaFin reform its practices.

British watchdog Financial Conduct Authority (FCA) said on Friday that it has frozen Wirecard’s operations there to protect its users’ funds.

An FCA statement said it had “imposed a number of requirements on Wirecard,” in particular forbidding it to “dispose of any assets or funds.”

In addition, Wirecard “must not carry on any regulated activities” and must inform its clients via the web and other methods of that ban.

Wirecard’s British unit sold prepaid e-money cards and provided other payment services. – Rappler.com

Add a comment

Sort by

There are no comments yet. Add your comment to start the conversation.

Summarize this article with AI