Wirecard affair triggers potential probe at financial watchdog – Handelsblatt

The Frankfurt public prosecutor's office is said to be looking into a potential investigation against senior employees at the German financial market supervisory authority BaFin in relation to the collapse of payments company Wirecard AG, Handelsblatt reported.

The authorities want to investigate whether BaFin fulfilled its supervisory duties and have submitted a request for information to the supervisory body, the newspaper said, citing sources familiar with the matter. A spokesperson for the prosecutor's office confirmed to Handelsblatt that it is looking into launching official proceedings.

In the course of their preliminary investigation, prosecutors have visited offices of BaFin, according to the Feb. 24 report. However, a BaFin spokesperson told Handelsblatt that the authorities have not searched the watchdog's offices and have only requested information.

The preliminary probe was triggered by reports from Wirecard shareholders to the authorities directed against unknown BaFin employees. The responsible BaFin officials are alleged to have violated their supervisory duties and potentially mishandled insider information.

Meanwhile, Edgar Ernst, president of the German Financial Reporting Enforcement Panel, or FREP, which is also in hot water with German authorities over its handling of fraud allegations against Wirecard, will step down Dec. 31.

He has decided to sever ties with FREP prematurely so the accounting body is not affected by the ongoing discussion about Ernst's supervisory board mandates, FREP said in a Feb. 24 statement. Ernst has faced criticism about potential conflicts of interest connected to his involvement with the supervisory boards of German tourism group TUI AG, retail group Metro AG and property company Vonovia SE.

A recent parliamentary inquiry revealed that Ernst had accepted a supervisory board position at Metro in 2017, a year after FREP banned senior employees, including its president, from taking on new supervisory board roles, the Financial Times reported Feb. 23.