This is a securities fraud class action filed on behalf of purchasers of Wirecard AG (“WireCard” or the “Company”) American Depositary Receipts, foreign issue shares and common stock between Apr. 7, 2016 through Oct. 15, 2019, inclusive (the “Class Period”), alleging claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against Wirecard and certain of the Company’s senior executives.
Wirecard is an Aschheim, Germany-based fintech company that offers electronic payment transaction services and risk management. The Company’s securities trade over-the-counter under the ticker symbols “WCAGY” and “WRCDF,” and in various German stock exchanges under the ticker symbol “WDI.”
The case concerns Defendants’ deliberate use of improper accounting designed to inflate sales and profits at Wirecard’s foreign subsidiaries, including businesses in Dubai, Ireland and Singapore. Specifically, throughout the Class Period, Defendants repeatedly affirmed the effectiveness of Wirecard’s internal controls and processes for financial reporting and attested to the accuracy of its reported financials. In truth, Defendants were violating International Financial Reporting Standards, by reporting in its financial statements: (i) significant debts that “transactional parties” purportedly owed to Wirecard businesses when, in truth, these entities were phantom companies; and (ii) improperly recognizing receivables from an under-capitalized Dubai-based firm. The Complaint further alleges that, unbeknownst to investors, Defendants were engaging in a coordinated scheme designed to mislead Wirecard’s auditor Ernst & Young to sign off on its false financials.
The truth emerged through a series of expose articles published by the Financial Times between Jan. 30, 2019 and Oct. 14, 2019, revealing an elaborate accounting fraud orchestrated at the highest levels of WireCard. Each disclosure caused the price of WireCard securities to decline sharply, thereby injuring investors.
