With the decision of January 10, 2024, III Zr 57/23, the Federal Supreme Court finally rejected a claim brought by a Wirecard shareholder for damages against BaFin (BGB § 839 para ntence 1 Ca; WpHG § 106 ff (F: until December 31, 2021). The Federal Supreme Court ruled that the measures taken by BaFin in the context of market abuse monitoring and balance sheet control regarding Wirecard AG, from April 2015 to June 2020, were justifiable.
The Plaintiff´s fail Wirecard investment
On January 27, 2020, the plaintiff and his wife acquired a total of 500 bearer shares in Wirecard AG at a price of €132.97 for a total of €66,475. On 25 June 2020, they sold the shares at a price of €3.3105 each resulting in a total of €1,648.25.
The Wirecard Scandal
Wirecard AG was founded in 1999 and was included in the German share index (DAX) in September 2018. As an issuer of shares, Wirecard AG was subject to financial market supervision and balance sheet control (Supervision of compliance with the provisions of the German Securities Trading Act (WpHG)) by the German financial supervisory authority, the Bundesanstalt für Finanzdienstleistungsaufsicht (
The annual and consolidated financial statements and management reports of Wirecard AG were audited by one of the five major audit companies, E&Y, up to and including the 2018 fiscal year, each with an unqualified opinion.
The publication of Wirecard AG’s annual and consolidated financial statements for 2019 was delayed multiple times. Finally, on June 18, 2020, the company issued an ad hoc announcement. It revealed that the auditor had not yet thoroughly audited bank balances meant for consolidation in the financial statements, which amounted to €1.9 billion (approximately a quarter of the total consolidated balance sheet). Furthermore, the announcement indicated suspicions that fraudulent activities were involved, as the auditor received potentially falsified balance confirmations
On 22 June 2020, the Management Board of Wirecard AG announced in a further ad hoc announcement that alleged bank balances in the amount of €1.9 billion at two banks in the Philippines were highly unlikely to exist. Three days later Wirecard AG filed for insolvency proceedings, which were opened by the Munich Local Court on 25 August 2020.
In previous years, there had already been repeated media reports, particularly in the “Financial Times”, about (accounting) irregularities in the Wirecard group.
BaFin`s statutory obligations
The plaintiff asserted that BaFin, despite evident indications, had for years failed to fulfil its statutory obligations to clarify, investigate, prevent, and report market manipulation by Wirecard AG and to provide accurate and complete information to the public and the capital market. Specifically, the plaintiff claimed that BaFin should have exercised balance sheet control itself.
The plaintiff has also raised fundamental legal questions regarding the conformity of the relevant provisions of the German WpHG ( § 108(1) sentence 2 no. 2 WpHG aF (from January 3, 2018 to
December 31, 2021, valid versions of §§ 106 ff WpHG; hereinafter only: aF) and Art. 24 (1) subpara. 1, (4) sentence two lit. h) of Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2011/34/EC (Transparency Directive). OJ L 390, 98) and Art. 22, 23 (2), (3) subpara. 1 of Regulation (EU) No 596/2014 of the European Parliament and of the Council of April 16, 2014, on market abuse (Market Abuse Regulation, OJ L 173/1).
The decision
The German Federal Supreme Court concluded that the raised fundamental questions are not relevant to their decision. The measures taken by BaFin in the context of market abuse monitoring and balance sheet control regarding Wirecard AG in the period from April 2015 to June 2020 do not violate § 6 or §§ 106 ff WpHG as well as the Transparency Directive or the Market Abuse Regulation and were in any case justifiable. A referral to the Court of Justice of the European Union pursuant to Art. 267 (1), (3) TFEU is therefore not necessary.
Ref: The audit should be directly conducted by BaFin.
The Court found that the claimaint missed to provide factual submissions that the conditions for an audit of the balance sheet by the defendant under its own responsibility, as neither “significant doubts” within the meaning of § 108 (1) sentence 2 no. 2 WpHG nor “simple doubts”, as considered sufficient by the plaintiff by way of an interpretation, were given at the beginning of 2019.
Therefore the BaFin’s decision to (initially) leave the audit of the financial statements to the German accounting audit authority DPR (Deutsche Prüfstelle für Rechnungslegung) was in any case justifiable.
Pursuant to § 108 (1) sentence 2 in conjunction with. § 107 (1) sentence 1 WpHG (old version) BaFin orders an audit of the accounting under its own responsibility if
a. There were concrete indications of a breach of accounting regulations
b. and DPR reported that a company had refused to cooperate in an audit or disagreed with the result of the audit (§ 108 (1) sentence 2 no. 1 WpHG aF).
Alternatively, significant doubts about the accuracy of the DPR´s findings or the proper conduct of the audit by DPR (aaO No. 2) could result in BaFin conducting an audit under its own responsibility.
The court argues that even in the case of Baffin, the defendant should have been legally required to exercise balance sheet control itself (in the event of “serious doubts”), the defendant would have been allowed to outsource the audit to any auditing company, including the DPR.
The Supreme Court rejected the plaintiff’s argument that the DPR was unsuitable from the outset to conduct the audit.
The Supreme Court confirmed that BaFin also complied with the general rule of § 6 WPHG aF, as it took appropriate actions regarding this matter. Wirecard´s potential market manipulation also occurred during the period from April 2015 to June 2020, so its conduct was justifiable and proportionate.
On 1 February 2019, BaFin initiated investigations into market manipulation by both market participants (short attack) and Wirecard AG (incorrect financial reporting, failure to publish allegations made by the Financial Times as insider information). It submitted requests for administrative assistance to the supervisory authority in Singapore and requested that Wirecard AG comment on the allegations on 8 February 2019 and 28 March 2019. On 15 February 2019, BaFin requested that DPR audit the condensed consolidated financial statements of Wirecard AG, including the management report as of 30 June 2018. On 29 March 2019, it asked that Wirecard AG submit the final report from the lawyers. Report of the law firm R. & T. Singapore LLP, which was submitted to it on 29 July 2019.
Bafin also responded to the article published on October 15, 2019 and instructed DPR to also take these allegations made by the Financial Times into account in the ongoing audit.
The fact that the defendant did not use the article of 24 April 2019 as a reason for immediate further investigative measures (e.g. search of the business premises of Wirecard AG) was not in breach of duty against the background that EY issued a clean audit opinion on 25 April 2019.
After the Financial Times published articles on 15 October 2019, supported their allegations with references to Wirecard AG’s internal documents, and BaFin informed the Munich public prosecutor’s office in accordance with Section 11, sentence 1, of the WpHG, it received notification that the matter was being investigated. This meant that the defendant had to ensure in its further course of action that its investigations did not jeopardise the purpose of investigations by the criminal prosecution authorities (cf.(see § 11 sentence 4 WpHG). In addition, BaFin learned in October 2019 through a Wirecard press release that Wirecard AG had commissioned KPMG to conduct an independent special investigation into the allegations made by the Financial Times. So BaFin – understandable – decided to wait for the result.
After considering the entirety of the circumstances, the German Supreme Court determined that the defendant unequivocally initiated inquiries into Wirecard AG, addressing potential market manipulation through misinformation in financial reports. The court found that the defendant thoroughly investigated the claims presented in the Financial Times articles.
The Wirecard scandal continues:
The judgment entirely overlooks that BaFin had been facing substantial allegations of money laundering related to Wirecard AG for many years (compare the Wirecard complaint filed by us). Given this history, the emergence of new accusations regarding balance sheet manipulation should have significantly heightened BaFin’s vigilance, compelling it to implement far more stringent measures.
The wirecard scandal has massively damaged the shareholder culture in Germany. Small shareholders have lost billions of euros as a result of the Wirecard insolvency. In his latest report to the creditors’ committee, the Munich-based lawyer Michael Jaffé reports that 44,700 retail shareholders alone have registered almost €7.72 billion in claims with the insolvency administrator.
This ruling, implying that BaFin denies any responsibility, does not improve the situation at all – it does quite the opposite.
