Wire Card is a German payment processing company. Their main business involved managing transactions and processing payments but their main revenue was from Porn and Gambling.
Wire Card went public on 24th November, 2006 at 5.22 Euro a share. It continued to grow and on 24th March, 2016 with investment from SoftBank and Credit Suisse their stock price grew 5 folds between 2016 and 2018 (192.45 Euro a share). But as their main revenue did not revolve around their main business. Wire Bank started faking numbers and over-valued sales to keep investors interested. Their offices in Dubai operated without legal licenses and things started to get haywire.
When journalist Dan McCrum (Financial Times) performed an investigation, he found out numbers were faked and source of revenue was faked. Even with customers over 300,000 the company’s fundamentals were very weak. All this was done to obtain a license from Hong Kong which would further help them in expansion.
Markus Braun is the mastermind behind this round-tripping (throwing money to subsidiary companies, to make it look like as if they have clients and a stable source of revenue). Markus Braun ex-CEO of Wire Card gets replaced by James Freis who joins as a compliance officer in start of July, He joins on Thursday and on Friday becomes interim CEO when Marcus resigns.
Marcus and his team were successful in showing a 17.5-Billion-dollar evaluation built entirely on lies, with all this evaluation when Wire Card was asked “Where’s the money?” They said they were in Escrow accounts in Philippines.
On 18th June, 2020 when auditor Ernst & Young checked their accounts and filed missing 1.9 Billion Dollar. After this the CEO resigned and was filed for insolvency. On 2008, when Lehman Brothers filed for bankruptcy their auditor was Ernst & Young too. So, a close investigation is going on Ernst and Young too by German lawsuit, as they have raised suspicions.
With all this happening, short-sellers made a total of 2.6 Billion dollars.
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