Frankfurt The bankruptcy of Wirecard AG in the summer of 2020 is one of the biggest economic scandals in German history. Private and institutional investors lost thousands of euros within a very short time. Since then, the cheated shareholders have been looking for ways to compensate for at least part of their losses – if possible without further cost risk.
The German Protection Association for Securities Ownership (DSW) presented its strategy on Wednesday in Frankfurt. Together with the law firms Nieding+Barth and AKD Benelux Lawyers, DSW has set up a foundation under Dutch law. She is to conclude an out-of-court settlement with EY. The auditors had approved the balance sheets without objection.
The legal cost financier only receives a commission of 25 percent if the case is successful. DSW Managing Director Marc Tüngler said: “The ‘Stichting Wirecard Investors Claim’ has the advantage that it enables a European settlement solution for all Wirecard investors who have suffered damage, especially with EY Global.” Choosing a Dutch foundation opens up options that are not given under German law.
Daniel Bauer, CEO of the SdK Investors’ Association, praised: “We fundamentally welcome the offer of a free compensation solution for aggrieved investors.” Patrick Haas, Partner at AKD Benelux Lawyers, reported on previous proceedings with the banks Meinl, Fortis and DSB, in which a foundation reached an agreement on damages.
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It cannot be ruled out that at least EY Germany will also voluntarily accept compensation. Because the investors received backing from the Higher Regional Court (OLG) in Munich in December. This rebuked the previous instance that there was definitely a basis for a claim for damages that the district court should have examined more thoroughly.
Strengths should be pooled
Due to the large number of lawsuits, the Higher Regional Court suggested an investor test case (KapMug). In March, the Munich district court finally initiated such a KapMug procedure, which is being conducted before the Bavarian Supreme Regional Court (BayObLG).
As usual, all pending lawsuits against EY are currently being suspended in order to determine a model plaintiff from among the group. Some investors, including institutional ones, are not particularly happy about the KapMug because of the long process.
The Telekom case, in which an agreement was only reached after 20 years, is repeatedly cited as a deterrent. When it went public in 2000, Telekom provided insufficient information in its prospectus about risks. When the price fell shortly after the issue, investors felt cheated and demanded compensation.
“The advantage of a KapMug procedure is that it is significantly cheaper than an individual lawsuit because the procedural costs are only calculated proportionately and costs for expensive expert reports are saved,” said Kewe, whose law firm is considered to be the pioneer of the model case. She has also applied for such a procedure against EY.
In addition, the plaintiffs are pooling their strengths through the cooperation of the lawyers. So institutional and private investors fought side by side. And he points out: “The Telekom procedure took a long time, but the result was a great success. Thanks to interest, investors were reimbursed for up to 140 percent of their damage.”
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Shareholders of the former payment service provider can only dream of such sums. Many initially tried their luck in the Wirecard insolvency proceedings. Creditors alone claim 3.2 billion euros. In addition, there are almost nine billion euros from shareholders. It is unclear whether they will be placed on an equal footing with the other creditors. The fund company Union Investment is therefore suing the Munich Regional Court, and the first hearing is in July.
Insolvency administrator Michael Jaffé has so far scraped together almost 700 million euros. He is also examining a lawsuit against EY Germany. The money won by him would flow into the bankruptcy estate, of which the shareholders – if they participate at all – only receive a fraction.
The shareholders who also take action against EY through lawsuits or the foundation would have to share the damages with Jaffé. In any case, the resources of EY Germany are limited. The balance sheet total of the auditor is only around 1.5 billion euros.
The Stichting therefore also wants to target EY Global and other EY entities involved in the audit. “From our point of view, this is only logical, since EY Global failed to supervise EY Germany and is therefore also liable for the damage to investors,” says Nieding.
A company that has the financial resources to pay appropriate compensation is also included. He expects a settlement in “three to four years” and believes that the KapMug will yield less.
Lawyers warn of further lawsuits to caution
30,000 private investors claiming damages of more than 1.5 billion euros have already registered with DSW. “Anyone who wants to be there should hurry, we want to start the comparison talks with EY as soon as possible,” said Nieding. But anyone who wants to join the Stichting is not allowed to file a parallel lawsuit against EY and is also not allowed to register for the KapMug.
In order to increase the pressure, Nieding wants to overwhelm the Munich district court with further lawsuits against Germany and EY Global, which he bundles as a dispute cooperative.
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Here, however, other lawyers urge caution. “In my opinion, there is no reliable legal basis for a claim to prove liability to EY Global,” explained Tilp’s attorney Kewe, for example. However, this would be necessary to put pressure on EY Global to participate in a comparison at all.
Nieding also said: “Our lawsuits against EY Germany and EY Global will not be suspended by the KapMug.” Other lawyers are skeptical. In the worst case, the corresponding procedures could only be pursued after a completed KapMug procedure and the foundation would have worse cards at the negotiating table.
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