Wirecard collapse prompts ESMA to evaluate German fin reporting system

Maria Nikolova

The assessment will focus on the application of the Guidelines on the Enforcement of Financial Information (GLEFI) by BaFin and FREP.

The European Securities and Markets Authority (ESMA) today announces that it will launch an assessment of the supervisory response in the financial reporting area by BaFin and the Financial Reporting Enforcement Panel (FREP) to the events leading to the collapse of Wirecard AG. It will be completed by 30 October 2020.

The assessment will focus on the application of the Guidelines on the Enforcement of Financial Information (GLEFI) by BaFin and FREP, the designated competent authorities for the supervision and enforcement of financial information in the Federal Republic of Germany under the Transparency Directive (TD).

The fast-track assessment will be conducted using GLEFI and ESMA’s Peer Review Methodology, within a compressed timeframe. The peer review tool has been chosen as the TD only contains high level principles regarding financial reporting and its supervision, and the IAS Regulation is not included in the list of acts for which ESMA may launch a Breach of Union Law investigation.

ESMA issued the GLEFI in 2014, on its own initiative, to promote consistent application and supervision of IFRS and in 2017, in support of this work, ESMA conducted a peer review with onsite visits in seven Member States. The review included BaFin and FREP and, while the country specific report highlighted positive aspects of the German enforcement model, it also identified areas for improvement. These included:

  • the procedures in place in both FREP and BaFin;
  • the selection and examination of issuers;
  • independence and conflict of interests in FREP; and
  • cooperation between the two authorities.

ESMA also invited BaFin and the European Commission, in the country-specific onsite report, to investigate whether the TD is correctly transposed by Germany, given BaFin’s self-declared inability to comply with the GLEFI due to a lack of enforcement powers.

In the meantime, the sales processes for the insolvent Wirecard AG’s core business, the acquiring and issuing business, as well as the independent business units of the Group companies worldwide have been launched. Following a further meeting of the preliminary creditors’ committee of Wirecard AG, the preliminary insolvency administrator, Dr. jur. Michael Jaffé of the law firm JAFFÉ Rechtsanwälte Insolvenzverwalter, announced that more than 100 parties have already registered interest.

Activities for the US company Wirecard North America are the most advanced. The international investment bank Moelis & Company has already been mandated to support the sale of this company with the approval of the preliminary creditors’ committee. Investor processes are also currently being initiated for other international affiliates as well as the core business, acquiring and issuing.

At the same time, ongoing costs are being further reduced. “We have already implemented cost-cutting measures. The insolvency funds for the more than 1,500 employees of the insolvent companies are currently relieving the liquidity situation. The employees will receive their first salary payments in a few days, as the pre-financing of the insolvency funds is already underway,” said the preliminary insolvency administrator Dr. jur. Michael Jaffé.

Measures have also been taken to safeguard assets at the various international locations. Experienced specialists have started work on this. Such efforts are accompanied by further clarification of the causes of the crisis and the analysis of cash flows.

Read this next

Retail FX

Banxso announces 8.7% interest rate on deposits in South Africa

“With Banxso, they can enjoy the benefits of both worlds – earning competitive interest and having the freedom to trade, all within the same platform.”

Industry News

FINRA to publish transaction details in U.S. Treasury securities

“Consistent with our longstanding practice, FINRA is introducing greater transparency in a calibrated and careful manner, benefiting liquidity and resilience in this critical market while also mitigating potential information leakage concerns.”

Institutional FX

OpenYield launches “cheap and easy” fixed income trading for brokers

“We’re on a mission to make bonds cheap and easy to trade, and are excited about the opportunity to build generational capital markets infrastructure.”

Digital Assets

Sumsub and Mercuryo publish a guide for VASPs: “Mastering Travel Rule Compliance”

“At Sumsub, we’ve concentrated our efforts on filling the gap in understanding the complexity of Travel Rule regulation and helping organizations find the best solution to stay safe and compliant while minimizing costs and avoiding potential risks of non-compliance. This guide we created with Mercuryo, our trusted partner, is the ultimate navigation tool all VASPs can consult.”

Digital Assets

Bitget Wallet Leads with Record Swap Volume & New Crypto Innovations

This week, Bitget Wallet achieved a milestone by surpassing Metamask with a record 388,757 Swap order transactions, securing the global lead. The significant 7-day trading volume, almost 68,000 more than its rival, underscores its liquidity and user trust. This robust activity signals Bitget Wallet’s prominent role and reliability in the dynamic crypto market.

Digital Assets

Embarking on a Digital Currency Journey

Imagine you’ve stumbled upon a treasure map, leading you to untold riches hidden in the vastness of the internet. Instead of gold coins and jewel-encrusted goblets, this treasure comes in the form of digital currencies, the modern-day loot coveted by many.

Reviews

Traders Union Experts Share The Trading Analyst Review For 2024

Navigating options trading in rapidly shifting markets poses a considerable challenge. This is where options trading alert services become invaluable. They aid traders in keeping abreast of evolving opportunities and market trends. In this assessment, Traders Union experts scrutinize The Trading Analyst alert service to ascertain its efficacy. 

Digital Assets

BlockDAG’s Presale Achieves $9.9M: Aiming For A 5000-Fold ROI As Cardano’s Price Rises And Fantom Launches Sonic

Explore Cardano’s surge, Sonic’s efficiency, and why BlockDAG’s growth makes it the top crypto choice. A deep dive into the future of blockchain investments.

Digital Assets

US, UK probe $20 billion Tether transfers tied to Russian exchange.

U.S. and UK authorities are investigating the movement of $20 billion in the USD-pegged stablecoin tether (USDT) through Moscow-based exchange Garantex.

<