Audit Regulator Who Bought Wirecard Shares Faces Scrutiny

The head of Germany’s accounting regulator faces scrutiny after telling a parliamentary committee that he traded Wirecard AG shares while his agency was reviewing the now bankrupt payment company’s external audits.

Germany’s economy minister Peter Altmaier told reporters in Berlin Friday that his staff will investigate the issue. Another lawmaker is calling for an insider-trading probe.

At a parliamentary hearing that ran past midnight, Ralf Bose, head of the accounting regulator, APAS, testified that he bought Wirecard stock at the end of April and sold it on May 20, at a loss. Within that period, APAS had upgraded its preliminary review of Ernst & Young’s audits for Wirecard to a fully-fledged probe.

“This is disconcerting,” Altmaier said. “We will talk to all people involved and will very diligently check whether all rules were complied with and whether there are consequences.”

APAS declined to comment beyond Altmaier’s statement. Attempts to reach Bose through APAS weren’t successful.

The accounting regulator last year started a preliminary investigation of EY over its Wirecard audits following an October 2019 article by the Financial Times about irregularities at the company. On May 6, APAS opened a formal probe into EY and passed on results to Munich prosecutors, who are now investigating the accounting firm.

Danyal Bayaz, the Green party’s member on the parliamentary committee, said he asked German financial regulator Bafin to probe Bose for insider-trading. Bose had told lawmakers he acquired the shares on April 28, the day KPMG, another accounting firm, disclosed the results of its supplemental investigation, which triggered Wirecard’s demise.

KPMG sent confidential attachments to its special report to Bafin on May 19. At a meeting a day later -- the day Bose sold the shares -- APAS and Bafin discussed the report and various regulatory action at a meeting, Bayaz said. While Bose claims to have sold the shares before that meeting, all of this constitutes insider information, the lawmaker said.

The Wirecard scandal continues to have ramifications for a wide swath of German companies and regulators.

KfW, Germany’s third-largest bank by assets, said Friday that it will drop EY as its auditor and will hire Deloitte instead, starting in 2022. EY’s contract with the state-owned lender expires at the end of 2021.

KfW is one of Wirecard’s creditors after its Ipex Bank unit granted the payment service provider a credit line of 100 million euros (“121 million) in 2018.

©2020 Bloomberg L.P.

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