Odey Says Regulator's Wirecard Short Ban Paves Way for Lawsuits

(Bloomberg) -- British hedge fund titan Crispin Odey, who has bet that shares of beleaguered fintech Wirecard AG will plummet further, said Germany’s financial regulator has opened to door to potential lawsuits after it took the unprecedented step of banning short sales on the payments company.

In an interview Monday, Odey said he’s now more excited about taking BaFin to court than his wagers on the Aschheim, Bavaria-based company. BaFin prohibited investors from taking new short positions in Wirecard or increasing existing ones through April 18 after the shares were whipsawed over the last month following a series of reports in the Financial Times alleging fraud at the payment company’s Singapore unit.

Odey Says Regulator's Wirecard Short Ban Paves Way for Lawsuits

“It’s a very dangerous thing that they have chosen to do over the weekend,” Odey said. “We are very excited about what we might be able to make in litigation against BaFin.”

The regulator needs to be sure that Wirecard’s employees haven’t engaged in any wrongdoing before having taken such a step, he said. BaFin, which had banned naked short sales on 11 firms during the global financial crisis, said it opted to ban such bets on a single company because the recent price volatility risks undermining the broader stock market.

A spokeswoman for BaFin declined to comment.

The London-based hedge fund manager, who is known for his bearish bets and vocal criticism of companies and central banks, disclosed a short against Wirecard on Jan. 30. Since then, his firm has raised its bet to 0.8 percent of the shares. The trade adds to Odey’s string of recent successes in wagering against companies such as Metro Bank Plc and Intu Properties Plc.

BaFin’s order comes after Munich prosecutors started their own probe into possible market manipulation. German newspaper Frankfurter Allgemeine Zeitung reported last week that the prosecutors have information indicating a short seller had prior knowledge of when the FT planned to publish news about Wirecard in its online edition.

©2019 Bloomberg L.P.