The European Securities and Markets Authority (ESMA) has identified shortcomings in the supervision of German regulators over the financial company Wirecard, which has declared insolvency this year as a result of a major accounting scandal. The Authority is an independent body of the European Union whose task is to improve investor protection and contribute to the stability and orderly functioning of financial markets.
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Wirecard declared insolvency in June, when it turned out that it lacked about 1.9 billion euros (roughly 50 billion CZK), which it reported in its accounts. German prosecutors subsequently detained some former executives, including Chairman Markus Braun, on suspicion of organized fraud, embezzlement, accounting fraud and stock market manipulation. German authorities have obtained evidence that the company’s management has fraudulently borrowed 3.2 billion euros. However, the accused deny any mistake.
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In connection with the scandal, there was criticism that the German authorities ignored a number of warning signs about the company’s management. In July, the European Commission (EC) instructed ESMA to review the conduct of German regulators. In today’s report on the results of the audit, the Office stated that it had identified a number of shortcomings, which related, inter alia, to the effectiveness of the control over the provision of financial information and the independence of the German Financial Supervisory Authority (BaFin).
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“The Wirecard case again emphasized that high quality financial information is essential to maintain investor confidence in capital markets,” said ESMA President Steven Maijoor.
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Wirecard was founded in 1999 and focused on payment processing and financial services. In Germany, it was considered a promising player in the fast-growing financial services market, given as a model of domestic success and described as the star of the German technology sector. The fall of the company also affected clients in the Czech Republic.
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