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MarketScreener Homepage  >  Equities  >  Xetra  >  Wirecard AG    WDI   DE0007472060

WIRECARD AG

(WDI)
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Real-time Estimate Quote. Real-time Estimate Tradegate - 07/09 07:54:28 am
2.706 EUR   -2.61%
06:39aGerman prosecutors probe Wirecard for money laundering
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06:35aThe man who led Wirecard into insolvency
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06:34aGerman prosecutors probe Wirecard for money laundering
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Germany Moves to Overhaul Accounting Oversight Amid Wirecard Scandal

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06/29/2020 | 05:35pm EDT

By Nina Trentmann

Germany is overhauling its framework for accounting oversight following a financial scandal at Wirecard AG, and is canceling the existing regulator's contract after 2021.

The Federal Ministry of Justice and Consumer Protection is working on a new regulatory setup together with the Federal Ministry of Finance, a spokesman for the justice ministry said.

The justice ministry on Monday also canceled its contract with the country's accounting watchdog, the Financial Reporting Enforcement Panel, effective Dec. 31, 2021.

Aschheim, Germany-based Wirecard last week filed for insolvency proceedings after disclosing a $2 billion accounting hole. The once-high flying electronic-payments company and member of the German Dax index of blue-chip companies on June 22 said the money missing from its balance sheet probably doesn't exist, confirming earlier reports by banks which said they never held the funds.

The events led to a meltdown of the company's stock and the exit of Wirecard's chief executive, and triggered a debate among German regulators questioning whether the current oversight regime was working

"The Federal Ministry of Justice and Consumer Protection -- together with the Federal Ministry of Finance -- is currently analyzing the extent of the need for reform...resulting from the Wirecard balance sheet scandal. It is important to ensure effective control at all times, " the spokesman for the justice ministry said.

The current regulator FREP was set up in 2004 in response to various accounting scandals and fraud cases, including at Enron Corp. The Berlin-based body is responsible for overseeing the accounts of both listed and closely held companies in Germany. It had 15 employees and a budget of just over $6 million in 2019, according to its most recent annual report.

FREP conducted 86 investigations in 2019, up from 84 in the prior year, and found issues in about 20% of those examinations, the regulator said in its annual report. It has pursued some prominent cases in the past, including one against sportswear maker Adidas AG.

BaFin, Germany's banking regulator, asked FREP in February 2019 to look into Wirecard's 2018 financial results following tips from a whistleblower, according to a spokeswoman. BaFin couldn't conduct the investigation on its own because of the existing regulatory structure that gave FREP the right to conduct the first probe, the spokeswoman said.

FREP didn't respond to a request for comment, and hasn't commented on the results of its probe.

BaFin launched a separate investigation into potential market manipulation by Wirecard in 2019. That investigation is still ongoing, the spokeswoman said. BaFin President Felix Hufeld is expected to attend a parliamentary committee hearing on the Wirecard case on Wednesday.

The BaFin spokeswoman declined to say if BaFin would take over accounting oversight at nonfinancial institutions, replacing FREP.

The case also is placing a spotlight on Wirecard's longtime auditor Ernst & Young.

EY on June 25 said its client gave the auditor false information.

"There are clear indications that this was an elaborate and sophisticated fraud, involving multiple parties around the world in different institutions, with a deliberate aim of deception," the company said in its statement.

The company declined to comment on its interactions with regulators.

The current debate in Germany about accounting oversight at Wirecard mirrors a similar situation in the U.K., in which the government is working to overhaul the existing regulatory framework following a string of corporate failures.

The U.K. last year said it would launch a new regulator called the Audit, Reporting and Governance Authority, and integrate the existing watchdog, Financial Reporting Council, into it. Those changes are still to happen.

Write to Nina Trentmann at Nina.Trentmann@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
ADIDAS AG 1.40% 239.8 Delayed Quote.-18.39%
DAX 1.48% 12678.61 Delayed Quote.-5.69%
WIRECARD AG -2.47% 2.72 Delayed Quote.-97.42%
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Financials
Sales 2019 2 769 M 3 137 M 3 137 M
Net income 2019 524 M 593 M 593 M
Net cash 2019 1 135 M 1 286 M 1 286 M
P/E ratio 2019 0,66x
Yield 2019 8,88%
Capitalization 340 M 384 M 385 M
EV / Sales 2018
EV / Sales 2019 -0,29x
Nbr of Employees 5 685
Free-Float 96,0%
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Mean consensus SELL
Number of Analysts 9
Average target price 18,00 €
Last Close Price 2,78 €
Spread / Highest target 1 160%
Spread / Average Target 548%
Spread / Lowest Target -64,0%
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Managers
NameTitle
James H. Freis Chief Executive Officer & Director
Thomas Eichelmann Chairman-Supervisory Board
Alexander von Knoop Chief Financial Officer
Wulf Matthias Member-Supervisory Board
Stefan Klestil Member-Supervisory Board
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