German investors are suing Wirecard auditor EY for €700 million

Following the collapse of financial group Wirecard, investment organization DSW filed a major damages claim against auditors EY Deutschland and EY Global.

DSW said the lawsuit includes claims for damages from more than 13,000 institutional and private investors in Wirecard with a claims volume of more than 700 million euros.

The document with appendices contains more than 80,000 pages. Thanks to the Dutch institution model and the participation of British litigation funders, investors do not face cost risks; A portion of the proceeds obtained through a judgment or settlement will only be passed in the event of success.

Then-listed payment processor Wirecard, which was included in the DAX, collapsed in June 2020 when it was discovered €1.9 billion had disappeared from escrow accounts in Asia. Former president Markus Braun, who comes from Austria, and two other former managers are in the dock on charges of falsifying accounts and mass fraud.

DSW: Rely on the statements of Wirecard management

DSW's lawyers, Klaus Nieding and Andreas Lange, explained that EY had failed to satisfy itself of the existence of the third-party business through its own examinations. Instead, the responsible auditors relied on Wirecard management's statements. “In addition, EY could have determined relatively easily that the €1.9 billion did not exist, because private auditors from KPMG discovered this very quickly later.”

No statement was received from auditor EY, which has approved the company's balance sheets from Aschheim near Munich for years.

According to a press report, Wirecard's insolvency administrator Michael Jaffe has also filed a lawsuit against the audit firm for damages. A Jaffe spokesman did not provide any details to Handelsblatt. The lawsuit was filed before the Stuttgart Regional Court this year in order to prevent the statute of limitations from expiring. Jaffe believes it has been proven that third-party dealings with alleged partners in Asia were fabricated.