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1/The reality of the Wirecard $WDI fraud is now unavoidably obvious for even the most blinkered of observers.
There are profound lessons that should emanate from the $WDI story
But first, let’s call out the winners and losers:
1/The reality of the Wirecard $WDI fraud is now unavoidably obvious for even the most blinkered of observers.
There are profound lessons that should emanate from the $WDI story
But first, let’s call out the winners and losers:
2/
Winners:
@FD Dan McCrum has literally been on this story for years, and became the subject of a criminal investigation in Germany as a result of exposing the truth of Wirecard. He’s an exemplar of investigative journalism.
Winners:
@FD Dan McCrum has literally been on this story for years, and became the subject of a criminal investigation in Germany as a result of exposing the truth of Wirecard. He’s an exemplar of investigative journalism.
3/
Winners con’t:
@FT For supporting @FD and standing by their reporting when the full weight of the German justice system was arrayed against him and the paper. Bravo.
Winners con’t:
@FT For supporting @FD and standing by their reporting when the full weight of the German justice system was arrayed against him and the paper. Bravo.
4/
Winners con’t:
@RodboydILM for being very early on this story and being right. Roddy is also an exemplar of investigative journalism and his org https://ffj-online.org/ is worthy of your support if you care about the truth in financial markets
Winners con’t:
@RodboydILM for being very early on this story and being right. Roddy is also an exemplar of investigative journalism and his org https://ffj-online.org/ is worthy of your support if you care about the truth in financial markets
5/
Winners con’t:
The shorts who persisted over a period of years, dug very deep, exposed the truth and for their efforts were criminally investigated, hacked by black hat security firms, and trolled by paid shills on Twitter
People involved on the short side include
Winners con’t:
The shorts who persisted over a period of years, dug very deep, exposed the truth and for their efforts were criminally investigated, hacked by black hat security firms, and trolled by paid shills on Twitter
People involved on the short side include
6/
Winners con’t:
The shorts that were active in exposing this fraud include
@AIMhonesty @alderlaneeggs @lordshipstrade @QCMfunds @WallStCynic
Apologies to those I have missed
Winners con’t:
The shorts that were active in exposing this fraud include
@AIMhonesty @alderlaneeggs @lordshipstrade @QCMfunds @WallStCynic
Apologies to those I have missed
7/
Losers
BaFin – their reputation as a financial regulator lies in tatters. The entire leadership of the organization should resign immediately. Merkel should launch a sweeping investigation.
Losers
BaFin – their reputation as a financial regulator lies in tatters. The entire leadership of the organization should resign immediately. Merkel should launch a sweeping investigation.
8/
Losers con’t:
Not only did BaFin fail to detect this massive, obvious fraud, it actively did $WDI ’s bidding by instigating a criminal investigation against $WD , the @FT (a first by a regulator AFAIK) and short sellers.
It also instituted a short selling ban to prop up $WDI
Losers con’t:
Not only did BaFin fail to detect this massive, obvious fraud, it actively did $WDI ’s bidding by instigating a criminal investigation against $WD , the @FT (a first by a regulator AFAIK) and short sellers.
It also instituted a short selling ban to prop up $WDI
9/
Losers con’t:
The Munich prosecutor’s office, who did BaFin’s & Braun’s bidding by actually pursuing the investigation of @FD & the shorts
Can anyone in this organization fog a mirror or accurately assess the wide array of damning facts presented against $WDI ? Bueller?
Losers con’t:
The Munich prosecutor’s office, who did BaFin’s & Braun’s bidding by actually pursuing the investigation of @FD & the shorts
Can anyone in this organization fog a mirror or accurately assess the wide array of damning facts presented against $WDI ? Bueller?
10/
Losers con’t:
DAX/Deutsche Borse - For putting this POS in the premier German equity index to start with, for keeping it there as the fraud was unearthed, and for not delisting it long ago.
Losers con’t:
DAX/Deutsche Borse - For putting this POS in the premier German equity index to start with, for keeping it there as the fraud was unearthed, and for not delisting it long ago.
11/
Losers con’t:
Taken as a whole, the ‘circling of the wagons’ by the German regulatory, business and media establishment around a long running and obvious fraud casts a large shadow on the integrity of the German economy.
Losers con’t:
Taken as a whole, the ‘circling of the wagons’ by the German regulatory, business and media establishment around a long running and obvious fraud casts a large shadow on the integrity of the German economy.
12/
Losers con’t
When the $WDI scandal is viewed in the context of many German banking frauds & the VW stock rigging by Porsche, investors can rightly ask whether German financial regulation is anything but a fig leaf. @muddywatersre phrase ‘Moscow on the Main’ is quite apt.
Losers con’t
When the $WDI scandal is viewed in the context of many German banking frauds & the VW stock rigging by Porsche, investors can rightly ask whether German financial regulation is anything but a fig leaf. @muddywatersre phrase ‘Moscow on the Main’ is quite apt.
13/
Losers con’t:
E&Y – One word: cash. If your audit can’t confirm the cash in the bank, you need to find another business. Full stop. E&Y is the auditor of record in two other major suspected frauds. Massive fines that pinch every partner are needed to send a message
Losers con’t:
E&Y – One word: cash. If your audit can’t confirm the cash in the bank, you need to find another business. Full stop. E&Y is the auditor of record in two other major suspected frauds. Massive fines that pinch every partner are needed to send a message
14/
Losers con’t:
The German press – With a few exceptions, the German press was happy to parrot the official line of $WDI and BaFin rather than taking the mounting evidence at face value. Imagine printing this on BaFin’s short ban without a hint of skepticism (Handelsblatt)
Losers con’t:
The German press – With a few exceptions, the German press was happy to parrot the official line of $WDI and BaFin rather than taking the mounting evidence at face value. Imagine printing this on BaFin’s short ban without a hint of skepticism (Handelsblatt)
15/
Losers con’t:
Black hat security firms – Recent years have seen a long line of financial basket cases (Theranos, Casino, AmTrust, etc) hire dodgy ‘private security’ firms often led by former government intelligence officers to hack and intimidate shorts and the media.
Losers con’t:
Black hat security firms – Recent years have seen a long line of financial basket cases (Theranos, Casino, AmTrust, etc) hire dodgy ‘private security’ firms often led by former government intelligence officers to hack and intimidate shorts and the media.
16/
Losers con’t:
$WDI played this game too. It is well past time for these ‘security’ firms to be exposed and regulated and for the lawyers (looking at you David Boies) and the corporations that hire them to be held accountable.
Losers con’t:
$WDI played this game too. It is well past time for these ‘security’ firms to be exposed and regulated and for the lawyers (looking at you David Boies) and the corporations that hire them to be held accountable.
17/
Losers con’t:
Online trolls – A recent tactic of financial frauds being exposed is to hire & deploy small armies of online trolls to harass, defame and dox media critics and short sellers. Almost certainly this involves stock manipulation as well. $WDI played this game too.
Losers con’t:
Online trolls – A recent tactic of financial frauds being exposed is to hire & deploy small armies of online trolls to harass, defame and dox media critics and short sellers. Almost certainly this involves stock manipulation as well. $WDI played this game too.
18/
Losers con’t:
Similar to the black hat security firms, this rock needs to be turned over to expose the parties who engage in this for a living and the almost certain violation of securities laws they are complicit in.
Losers con’t:
Similar to the black hat security firms, this rock needs to be turned over to expose the parties who engage in this for a living and the almost certain violation of securities laws they are complicit in.
19/
Losers con’t:
CNBC – It may be gratuitous to even bother calling out their wholly uncritical reporting, but they can’t even be bothered to run a legitimate clip on the exposure of the fraud Imagine having this as the sum total of your $WDI video clips for the last 2 ½ years
Losers con’t:
CNBC – It may be gratuitous to even bother calling out their wholly uncritical reporting, but they can’t even be bothered to run a legitimate clip on the exposure of the fraud Imagine having this as the sum total of your $WDI video clips for the last 2 ½ years
20/
In summary, the $WDI fraud has all the features of today’s highly evolved art of corporate financial fraud. Its scale, duration, and brazenness (faked cash!) highlight just how free a hand financial fraudsters enjoy to ply their trade.
In summary, the $WDI fraud has all the features of today’s highly evolved art of corporate financial fraud. Its scale, duration, and brazenness (faked cash!) highlight just how free a hand financial fraudsters enjoy to ply their trade.
21/
It also exposes just how deep the rot is in the realms of regulation, accounting, securities exchanges, and (with important exceptions) almost all of the financial and business media.
It also exposes just how deep the rot is in the realms of regulation, accounting, securities exchanges, and (with important exceptions) almost all of the financial and business media.
22/If there are any people in these areas that retain a conscience (debatable, but one can hope), this should be a come-to-Jesus moment to assess what purpose they serve
If you are still baffled about the rise of populism vs financial interests, this should be your wake-up call
If you are still baffled about the rise of populism vs financial interests, this should be your wake-up call
23/
I’m told that there are US prosecutors investigating $WDI . This is a career making opportunity for someone. They should pull on EVERY thread in the story, and follow them to their ultimate ends.
I’m told that there are US prosecutors investigating $WDI . This is a career making opportunity for someone. They should pull on EVERY thread in the story, and follow them to their ultimate ends.
24/
What will be learned will be revelatory, IMO, and could help reset the rules so that truth once again is a touchstone in financial markets, as opposed to the rampant fake narratives, bogus financials and see no evil oversight that pervades corporate disclosure today.
What will be learned will be revelatory, IMO, and could help reset the rules so that truth once again is a touchstone in financial markets, as opposed to the rampant fake narratives, bogus financials and see no evil oversight that pervades corporate disclosure today.
25/
A fraud this big and blatant can only persist for this long with the assistance, either active or passive, from a wide range of enablers. They all need to be named, shamed and suffer the consequences of their complicity for the good of the financial markets. /fin
A fraud this big and blatant can only persist for this long with the assistance, either active or passive, from a wide range of enablers. They all need to be named, shamed and suffer the consequences of their complicity for the good of the financial markets. /fin
26/
You can add Herbert Smith Freehills to the list of enablers.
Consider this list a work in progress. https://twitter.com/RodBoydILM/status/1273711279530815509
You can add Herbert Smith Freehills to the list of enablers.
Consider this list a work in progress. https://twitter.com/RodBoydILM/status/1273711279530815509
27/An excellent @WSJ follow up story
According to the story, $WDI was the only company in German history to be the subject of a short selling ban outside of a financial crisis.
Curious minds in German financial, regulatory & govt circles will ask why
Release the BaFin emails
According to the story, $WDI was the only company in German history to be the subject of a short selling ban outside of a financial crisis.
Curious minds in German financial, regulatory & govt circles will ask why
Release the BaFin emails
28/The @WSJ story also discussed the stalking and legal harassment of short sellers that @WDI deployed in an effort to conceal its fraud
29/The story also references hacking attempts against short sellers & journalists investigating $WDI that were recently documented by @citizenlab
They identified Dark Basin & BellTroX, a firm headed by an indicted hacker for hire, as the source of these attacks.
They identified Dark Basin & BellTroX, a firm headed by an indicted hacker for hire, as the source of these attacks.
30/ Link the the @citizenlab report on Dark Basin and BellTroX https://citizenlab.ca/2020/06/dark-basin-uncovering-a-massive-hack-for-hire-operation/
31/ To all my German friends, the question of the day is:
What's in your deposit guarantee fund?
Would it matter if it turned out that BaFin was protecting a fraud that threatened the solvency of this fund?
Release the BaFin / $WDI emails
What's in your deposit guarantee fund?
Would it matter if it turned out that BaFin was protecting a fraud that threatened the solvency of this fund?
Release the BaFin / $WDI emails
32/ If you though the circling of the wagons on $WDI by the German establishment would end, you would be mistaken.
It's see no evil, all the time.
It's see no evil, all the time.
34/ @John_Hempton is asking the right questions of the German FinMin.
The 'locust' shorts nailed the $WDI case *years* ago.
BaFin can't find the keys to the men's room.
The German establishment has lost touch with reality or is grievously corrupt.
https://brontecapital.blogspot.com/2020/06/olaf-scholz-german-finance-minister-is.html?spref=tw
The 'locust' shorts nailed the $WDI case *years* ago.
BaFin can't find the keys to the men's room.
The German establishment has lost touch with reality or is grievously corrupt.
https://brontecapital.blogspot.com/2020/06/olaf-scholz-german-finance-minister-is.html?spref=tw
35/ The CDS market is pricing in a recovery of 10% on the $WDI bonds.
The market is telling you the entire business is fiction, and the only assets will be litigation claims against officers, directors and the auditors.
Too bad they can't sue BaFin
The market is telling you the entire business is fiction, and the only assets will be litigation claims against officers, directors and the auditors.
Too bad they can't sue BaFin
36/ $WDI isn't a 'black swan' but a predictable result of German business & regulatory culture
The German establishment acts as if it has some monopoly on the "truth" rather than acknowledging the realities of the Internet age
This is your wake up call
https://www.ft.com/content/27872df6-b496-11ea-8ecb-0994e384dffe
The German establishment acts as if it has some monopoly on the "truth" rather than acknowledging the realities of the Internet age
This is your wake up call
https://www.ft.com/content/27872df6-b496-11ea-8ecb-0994e384dffe
37/ Whatever you imagined the depravity at BaFin to be, it isn't expansive enough. They had a whistleblower and still looked the other way.
The question that must be answered is why.
Release the BaFin emails regarding $WDI
The question that must be answered is why.
Release the BaFin emails regarding $WDI
38/ The inevitable comes to pass as $WDI files for insolvency.
Per Reuters, two thirds of the revenue was FAKE.
Let that sink in.
https://www.reuters.com/article/us-wirecard-accounts/wirecard-collapses-owing-creditors-4-billion-idUSKBN23W176
Per Reuters, two thirds of the revenue was FAKE.
Let that sink in.
https://www.reuters.com/article/us-wirecard-accounts/wirecard-collapses-owing-creditors-4-billion-idUSKBN23W176
39/ Braun and Marsalek must do jail time, of course.
But the bigger focus needs to be placed on BaFin.
BaFin used all its might to muzzle the critics and help hide all this fakery.
BaFin, the freaking regulator, defrauded investors with this action.
Let that sink in.
But the bigger focus needs to be placed on BaFin.
BaFin used all its might to muzzle the critics and help hide all this fakery.
BaFin, the freaking regulator, defrauded investors with this action.
Let that sink in.
40/ Mere incompetence does not explain BaFin's behavior in the $WDI case.
There were multiple opportunities over many years to get a clue on the $WDI fraud. The people at BaFin can't all be this stupid.
There were multiple opportunities over many years to get a clue on the $WDI fraud. The people at BaFin can't all be this stupid.
41/ BaFin needs to be stripped naked on this case to get to the truth of what actually went on.
Every scrap of information BaFin holds on $WDI needs to be put into the public domain so that ALL of the people that acted to prop up $WDI and their motives can be identified.
Every scrap of information BaFin holds on $WDI needs to be put into the public domain so that ALL of the people that acted to prop up $WDI and their motives can be identified.
42/ As a very small start in the process of its rehabilitation as an institution, BaFin owes an abject apology to all of those that tried to expose the fraud and were instead prosecuted by BaFin leadership.
Many of them suffered serious personal and professional harm as a result
Many of them suffered serious personal and professional harm as a result
43/ BaFin should also reimburse every dime of legal expenses these people incurred to defend themselves against BaFin's spurious charges.
Finally, I'll ask one more time, why does Felix Hufeld still hold his job??????
Finally, I'll ask one more time, why does Felix Hufeld still hold his job??????
44/ The Germans are still in denial.
Firing of regulators *may* be required????
Sorry, you don't persecute the truth tellers in a scandal like this and get to keep your job.
#FAIL
Firing of regulators *may* be required????
Sorry, you don't persecute the truth tellers in a scandal like this and get to keep your job.
#FAIL
45/ The $WDI fraud lawsuit against EY will never go to trial.
These are what litigators call, "bad facts" https://twitter.com/FinancialTimes/status/1276502016387416064
These are what litigators call, "bad facts" https://twitter.com/FinancialTimes/status/1276502016387416064
46/ Among the $WDI questions that remain unanswered is this one:
47/ More "bad facts" for E&Y
48/ E&Y now suspects that all of $WDI Asia business was fake.
h/t @AIMhonesty https://twitter.com/wischmeyer_n/status/1277631006762287105
h/t @AIMhonesty https://twitter.com/wischmeyer_n/status/1277631006762287105
49/ BaFin and the ECB considered putting $WDI on a watchlist but decided against it, according to Reuters, despite all the evidence that implied major problems with the firm.
The question is why? Qui Bono?
h/t @AIMhonesty
https://www.reuters.com/article/us-wirecard-accounts-regulators-exclusiv/exclusive-germany-missed-chances-to-put-wirecard-on-watchlist-source-says-idUSKBN2402C4
The question is why? Qui Bono?
h/t @AIMhonesty
https://www.reuters.com/article/us-wirecard-accounts-regulators-exclusiv/exclusive-germany-missed-chances-to-put-wirecard-on-watchlist-source-says-idUSKBN2402C4
50/ Wondering why E&Y didn't dig deeper to confirm $WDI 's cash?
E&Y's maximum liability under German law is a whopping 4MM Euros. What were their fees in the last decade?
Incentives matter.
h/t @AIMhonesty
https://www.sueddeutsche.de/wirtschaft/wirecard-ii-privileg-muss-weg-1.4957361
E&Y's maximum liability under German law is a whopping 4MM Euros. What were their fees in the last decade?
Incentives matter.
h/t @AIMhonesty
https://www.sueddeutsche.de/wirtschaft/wirecard-ii-privileg-muss-weg-1.4957361
51/ German financial regulation remains a joke.
Zero accountability
Zero accountability
52/ Yes, of course the "sports car enthusiast" ran $WDI 's Card Systems from his apartment in the Burj Khalifa!
All that's missing are the hookers and the blow.
Can't make it up.
Arrested at the Andaz Munich
https://www.ft.com/content/e9d54dba-6952-4ed5-9ddc-6cca15773b63
All that's missing are the hookers and the blow.
Can't make it up.
Arrested at the Andaz Munich
https://www.ft.com/content/e9d54dba-6952-4ed5-9ddc-6cca15773b63
