Monday 18 February 2019 9:45 am

German regulator bans short selling on fintech firm Wirecard after shares plunge

The German financial regulator Bafin has banned short selling on fintech company Wirecard as its plunging share price has caused uncertainty in the market.

The global payment service provider have plummeted in recent weeks amid reports of an alleged fraud at its Singapore office and an investigation by local police.

Read more: Will Wirecard wave goodbye to the DAX?


Shares in the company climbed 11 per cent after the ban was imposed this morning.

The German regulator said the company had become the target of “short attacks”, which posed a serious threat to market confidence.

It banned investors from establishing or increasing a short position in Wirecard until 18 April.

Wirecard’s share price has fallen sharply from €167 at the end of last month to €99 on Friday.

Bafin said there had been a substantial increase in the net short positions in shares of Wirecard in recent days, forcing it to introduce the ban.

Bafin said: “The events described above have resulted in uncertainty in the market, particularly with regard to the appropriate price determination for shares of Wirecard.

“In the current situation, there is a risk that this uncertainty will increase and escalate into general market uncertainty.”


The European financial watchdog ESMA agreed with the emergency short-selling ban and said it was necessary to address a “serious threat” to market confidence in Germany.

Read more: Germany narrowly avoids recession as GDP stagnates in the fourth quarter

It said: “ESMA considers that the current circumstances related to Wirecard are adverse events or developments which constitute a serious threat to market confidence in Germany, and that the proposed measure is appropriate and proportionate to address the threat to German financial markets.”

Chief executive Markus Braun said an internal investigation into the alleged fraud found no wrongdoing and was confident that an independent investigation by law firm Rajah & Tann would reach the same conclusion.

 

 

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