Wirecard: Wirecard scandal: a damper for tens of thousands of shareholders

MUNICH (dpa-AFX) - An initial decision by the Bavarian Supreme Court has dampened the hopes of tens of thousands of shareholders for compensation in the Wirecard scandal. Accordingly, no claims for damages can be brought against the auditing firm EY, which had confirmed the balance sheets of the scandalous group until its collapse in summer 2020, in the capital investor model proceedings. This was announced by court president Andrea Schmidt. Model claimant lawyer Peter Mattil called the decision "one hundred percent wrong" and announced an appeal to the Federal Court of Justice. The civil test case before the Bavarian Supreme Court runs parallel to the criminal trial in which former CEO Markus Braun and two co-defendants have been on trial since December 2022. According to the judge, almost 8,700 investors have now sued for damages. A further 19,000 have filed claims without suing themselves. One plaintiff for all The 1st Civil Senate selected a Hessian banker who lost half a million euros on Wirecard securities as a representative model plaintiff. The actual target of the plaintiffs is EY: the company is solvent, while the general opinion is that there is nothing more to be gained from former CEO Braun and Co. "Not admissible" Court President Schmidt justified the "partial model decision": Only actions for misinformation of the capital market can be bundled in model proceedings. This includes false balance sheets and false mandatory disclosures to the stock exchange. However, according to the Senate's reasoning, EY did not publish the false Wirecard balance sheets including the EY confirmation note itself, but rather the Wirecard management. In this respect, claims for damages against EY in the test case are "not admissible" according to the court. Former CEO Braun does not claim that the Wirecard balance sheets were correct either: The manager, who has been in custody for over four and a half years, accuses a gang of fraudsters around the former Chief Sales Officer Jan Marsalek, who has gone into hiding, of stealing billions from the Group. Test case against Braun continues The decision of the Bavarian Supreme Court does not mean that Wirecard shareholders could not take legal action against EY. However, according to the judge, the basis should be the "breach of audit duties", not the false information provided to the capital market. The claims for damages against Braun and other former major Wirecard shareholders will continue to be negotiated in the test case without a detour via the BGH. "It continues," said Schmidt. Stones instead of bread The lawsuits against EY will also continue, but the proceedings will now take longer. "It has to be said that it has become even more complicated," said Daniela Bergdolt, Vice President of the investor association DSW. "The proceedings are being torn apart." The decision gives the plaintiff Wirecard shareholders "more stones than bread". Model claimant lawyer Mattil hopes that the BGH will rule on the appeal next year. According to the lawyer, since last year, the Capital Investor Model Case Act - KapMUG for short - has expressly stipulated that claims for damages can also be asserted against auditors. As Wirecard filed for insolvency in 2020, this does not apply retroactively. However, Mattil is convinced that the original law also allows the claims for damages against EY to be included in the model case. "We believe that we have the much stronger arguments." A frozen avalanche of litigation Should the BGH decide otherwise, the Munich I Regional Court could be faced with a currently frozen avalanche of litigation. Model proceedings are actually intended to speed up the administration of justice: A single trial is supposed to clarify by way of example whether droves of plaintiffs are entitled to damages or not. Subsequently, the Munich I Regional Court would "only" have to deal with the individual details in the almost 8,700 proceedings and decide whether and how much money each individual plaintiff is entitled to. As long as the test case is ongoing, the 8,700 lawsuits are suspended. Unless the plaintiffs withdraw their claims against EY in droves, the court would probably have to deal with each case individually from the outset. However, even a test case does not guarantee a quick decision: The Telekom case, the first test case in Germany, is still regarded as a negative example. This lasted twenty years and, according to DSW estimates, 30 percent of the plaintiffs died before the end of the proceedings, including the original model case plaintiff./cho/DP/nas MUNICH (dpa-AFX) - An initial decision by the Bavarian Supreme Court has dampened the hopes of tens of thousands of shareholders for compensation in the Wirecard scandal. Accordingly, no claims for damages can be brought against the auditing firm EY, which had confirmed the balance sheets of the scandalous group until its collapse in summer 2020, in the capital investor model proceedings. This was announced by court president Andrea Schmidt. Model claimant lawyer Peter Mattil called the decision "one hundred percent wrong" and announced an appeal to the Federal Court of Justice. The civil test case before the Bavarian Supreme Court runs parallel to the criminal trial in which former CEO Markus Braun and two co-defendants have been on trial since December 2022. According to the judge, almost 8,700 investors have now sued for damages. A further 19,000 have filed claims without suing themselves. One plaintiff for all The 1st Civil Senate selected a Hessian banker who lost half a million euros on Wirecard securities as a representative model plaintiff. The actual target of the plaintiffs is EY: the company is solvent, while the general opinion is that there is nothing more to be gained from former CEO Braun and Co. "Not admissible" Court President Schmidt justified the "partial model decision": Only actions for misinformation of the capital market can be bundled in model proceedings. This includes false balance sheets and false mandatory disclosures to the stock exchange. However, according to the Senate's reasoning, EY did not publish the false Wirecard balance sheets including the EY confirmation note itself, but rather the Wirecard management. In this respect, claims for damages against EY in the test case are "not admissible" according to the court. Former CEO Braun does not claim that the Wirecard balance sheets were correct either: The manager, who has been in custody for over four and a half years, accuses a gang of fraudsters around the former Chief Sales Officer Jan Marsalek, who has gone into hiding, of stealing billions from the Group. Test case against Braun continues The decision of the Bavarian Supreme Court does not mean that Wirecard shareholders could not take legal action against EY. However, according to the judge, the basis should be the "breach of audit duties", not the false information provided to the capital market. The claims for damages against Braun and other former major Wirecard shareholders will continue to be negotiated in the test case without a detour via the BGH. "It continues," said Schmidt. Stones instead of bread The lawsuits against EY will also continue, but the proceedings will now take longer. "It has to be said that it has become even more complicated," said Daniela Bergdolt, Vice President of the investor association DSW. "The proceedings are being torn apart." The decision gives the plaintiff Wirecard shareholders "more stones than bread". Model claimant lawyer Mattil hopes that the BGH will rule on the appeal next year. According to the lawyer, since last year, the Capital Investor Model Case Act - KapMUG for short - has expressly stipulated that claims for damages can also be asserted against auditors. As Wirecard filed for insolvency in 2020, this does not apply retroactively. However, Mattil is convinced that the original law also allows the claims for damages against EY to be included in the model case. "We believe that we have the much stronger arguments." A frozen avalanche of litigation Should the BGH decide otherwise, the Munich I Regional Court could be faced with a currently frozen avalanche of litigation. Model proceedings are actually intended to speed up the administration of justice: A single trial is supposed to clarify by way of example whether droves of plaintiffs are entitled to damages or not. Subsequently, the Munich I Regional Court would "only" have to deal with the individual details in the almost 8,700 proceedings and decide whether and how much money each individual plaintiff is entitled to. As long as the test case is ongoing, the 8,700 lawsuits are suspended. Unless the plaintiffs withdraw their claims against EY in droves, the court would probably have to deal with each case individually from the outset. However, even a test case does not guarantee a quick decision: The Telekom case, the first test case in Germany, is still regarded as a negative example. This lasted twenty years and, according to DSW estimates, 30 percent of the plaintiffs died before the end of the proceedings, including the original model case plaintiff./cho/DP/nas