FCA blocks Wirecard as Brussels eyes German regulation
Wirecard AG
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07:46 20/03/24
The Financial Conduct Authority blocked Wirecard from doing business in the UK or disposing of assets Brussels called for an inquiry into whether Germany's regulator failed in its supervision of the collapsed payments company.
Xetra DAX
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The FCA said Wirecard must not carry out regulated activities in the UK and must not dispose of any assets or funds. The regulator told Wirecard to put a statement on its website telling customers it is banned from conducting regulated business.
After Wirecard revealed €1.9bn was missing from its accounts on 18 June the FCA told Wirecard UK not to pay out or reduce money it holds for customers unless instructed by them. The FCA told Wirecard to stop regulated activities as an extra measure to protect consumers, it said.
"Our primary objective is to protect the interests and money of consumers who use Wirecard," the FCA said. "We have been working closely with Wirecard UK and other authorities over the past few days to take action that protects consumers."
The UK clamped down on Wirecard as a top EU official said there should be an investigation into the apparent failings of BaFin, the German banking regulator, in its oversight of Wirecard. Valdis Dombrovskis, the EU's vice president for financial services policy, said he was writing to the EU's top markets supervisor about the matter.
"We will be asking Esma [European Securities and Markets Authority] to investigate whether there have been supervisory failures and if so to set out a possible course of action," Dombrovskis told the Financial Times. "We need to clarify what went wrong."
As Wirecard headed for insolvency on Thursday BaFin's president, Felix Hufeld, said earlier this week that his agency and others had not been effective enough in preventing the "complete disaster" at Wirecard, which was seen as a financial technology success for Germany, whose economy is weighted towards industry.
BaFin banned short-selling of Wirecard's shares for two months in February as concerns mounted about the reliability of its accounts. The regulator also filed a criminal complaint against FT journalists who reported allegations made by whistleblowers about accounting fraud at the company.
Dombrovskis said investor trust in public companies was important as the EU integrates capital markets. "Investors need to be sure that they are receiving proper and truthful information … and that provision of this financial information is properly supervised," he told the FT.
Wirecard's former chief executive, Markus Braun, was arrested on Monday on suspicion of false accounting. He denies wrongdoing.