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FRANKFURT, Feb. 9 (Reuters) – German Payments Company Wirecard is preparing to end the stormy week of the week, as fraud charges have built up over investors' concerns over lack of transparency.
Singapore police confirmed to AFP that they searched the premises of the Munich-based financial technology company after a series of reports by the Financial Times (FT) alleging misstatements in its Asian arm.
A spokesman for Wirecard told AFP yesterday that the computer technology company had "provided police with information regarding its investigation" in the city.
"We intend to continue to cooperate … and to commit ourselves to carry out our internal investigation and to disclose these results to the public," he added.
But reports of the raid prompted Wirecard to plunge back to the bottom of the DAX index of German prime shares, to trade at € 92.58 (RM427.02) at 4:45 pm in Frankfurt (11:45 pm, Friday in Malaysia) – down 16.4 percent the same day.
Its shares have lost more than 30% of their value since the beginning of the year, mainly since the FT denounced "potential violations of Singapore law" by a leader based on Jan. 30.
The market capitalization of the group has decreased by nearly 9 billion euros in eight working days since this first article, to settle at 11.5 billion.
Manipulation of the market?
Wirecard challenged the charges, claiming that she was considering bringing a lawsuit against the Nikkei-owned FT because of her numerous investigations.
Meanwhile, separate investigations by Munich prosecutors and the German market watchdog, Bafin, are investigating whether deliberate manipulation of the market could lag behind negative stocks.
"The FT's defamatory accusations against Wirecard employees are unfounded," said the spokesman for the company.
Wirecard has issued similar statements after each FT release.
In its latest report released Thursday, the financial daily claimed that two executives from its Aschheim base, in the suburbs of Munich, were aware of the use of an accounting ploy known as the "diversion" to strengthen its accounts in the Asia region.
The succession of blows early in the year hit Wirecard shortly after his greatest triumph.
It was launched in 1999 as a processor for electronic payments, at a time when the big banks were unaware of the terrain and the scene of the embryonic fintech.
At the end of last year, Wirecard dismissed the second largest German lender, Commerzbank, from the prestigious DAX index, outweighing the giant Deutsche Bank with a market value of more than € 23 billion.
However, many investors remained wary of the financial world and its "very complicated" business model, warns Bank badyst Marius Fuhrberg in AFP.
Past attacks
"There were already questions about accounting (from Wirecard)," said Fuhrberg.
In 2008, the firm went to war against the German small shareholder badociation SdK, which accused it of false accounting, while Wirecard suspected itself of being manipulated by the market.
Later, in 2016, the stock price slid after the publication by Zatarra Research, a previously unknown market observer, reporting false financial reporting and fraud.
In concluding that someone had tried to manipulate the course of action, the market watchdog, Bafin, forwarded the case to Munich prosecutors.
One person was finally charged last year, while another was paid to avoid prosecution.
"Wirecard has often been under pressure from short sellers attacks, making investors susceptible to any new attack," said Fuburg of Warburg.
Short sellers earn money by agreeing to sell stocks that they do not own yet at a given price on a certain date, in the hope of being able to buy them cheaper and achieve a profit on the difference.
In this context, the accusations of a "very well established newspaper" create a "particular uncertainty", "especially when the skin of the company's reputation is not very thick," said Oliver Roth of Oddo Seydler Bank. . – AFP
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