Civil litigation: investor suits, the model proceeding and the voided accounts

analysisAccording to the Munich I regional court, investors began suing the auditor EY for compensation in June 2020; by January 2023, 1,178 such suits had been filed, handled by nine banking chambers. The court reported that 2,251 Wirecard-related cases reached it from mid-2019 to the end of 2022. In March 2022 it initiated an investor model proceeding against EY, conducted by the Bavarian Supreme Regional Court (101 KAP 1/22). An order of that court of 13 May 2024 lists eleven model defendants: Markus Braun; EY; four EY auditors who worked on the 2014–2018 audits, not named in the order; Alexander von Knoop; Jan Marsalek, whose whereabouts are unknown; MB Beteiligungsgesellschaft mbH, now represented by its provisional insolvency administrator; Michael Jaffé as insolvency administrator of Wirecard AG; and Oliver Bellenhaus, who headed Wirecard AG's branch in Dubai. ^{1 2}

analysisAccording to the facts set out in the referral order, as the court summarises the claimants' allegations, Braun is accused of having misinformed the capital market as chief executive through incorrect consolidated statements for 2014–2018, missing disclosures and untrue ad hoc announcements, and EY of issuing false audit opinions and aiding the alleged breaches; EY gave unqualified opinions for each of those years. The court has not ruled on these allegations. On 13 May 2024 it held that the proceeding was interrupted against MB Beteiligungsgesellschaft but not against the other ten defendants, refused to restore EY's former party name after its conversion into EY GmbH & Co. KG Wirtschaftsprüfungsgesellschaft, rejecting the argument that the conversion was void, and refused to sever the proceedings against EY, MB and Braun, which would have created parallel model proceedings. ^{2 3}

analysisOn 5 May 2022 the 5th commercial chamber of the Munich I regional court declared Wirecard AG's annual accounts for 2017 and 2018 void (5 HK O 15710/20). On 29 November 2024 the Frankfurt am Main higher regional court ruled, in a judgment that was not final, that the D&O insurer owed no further cover to Wirecard AG's former director of accounting, who had also been managing director of Wirecard Technologies GmbH: the insured event occurred in 2020, when the EUR 15 million limit had been fully paid out for covered costs, not in 2019 with its limit of EUR 25 million, because the circumstances he cited, critical Financial Times reporting, the Singapore investigations and a US class action, had not been properly notified to the insurer. ^{1 2}

analysisWirecard's 2011 annual report states that the group pursued damages claims in Great Britain, in particular for fraud, against a customer and persons close to it; after a High Court judgment in London in its favour it began enforcement in 2010 and in 2011 recovered most of the money through the forced sale of a property. The report does not name the defendants. The 2019 prospectus discloses that the insolvency administrator of a former IT service provider was seeking to enforce a claim against a group company based on a 2014 confession of judgment, which Wirecard appealed on the ground that the claim had been settled; parties and outcome are not in the record. ^{1 2}