Germany bans investors’ ‘short’ bets that fintech Wirecard stock will fall

GERMANY’S financial regulator has taken the unprecedented step of temporarily banning short sales of Wirecard shares following reports of suspicious accounting practices, while prosecutors in Munich expanded their investigation to include a ‘Financial Times’ journalist.

Investors globally are immediately prohibited from taking new short positions or increasing existing ones through April 18, according to watchdog BaFin. That’s the first time it has banned short-selling on a single stock and harks back to the financial crisis, when the regulator prohibited naked short sales on 11 financial firms.

Wirecard got its start two decades ago processing payments for gambling and pornography websites. It has since morphed into a leading developer of software and systems for online payments and fraud protection used across the internet and dealt with similar claims in the past.

The short-selling ban was coordinated with Munich prosecutors, who have launched a probe over potential market manipulation in Wirecard shares. In a statement on Monday, the prosecutor said it was investigating a complaint by an investor against an FT journalist.

The authority also said it had a statement from an investor who said he had obtained information over a pending FT story about Wirecard prior to publication. The FT denied sharing plans about its reporting and said any claims that its staff were involved in market manipulation in relation to Wirecard were “baseless and false”.

Even though Wirecard denied wrongdoing, investors have increased so-called “shorts” or bets that the stock will fall.