What Happened at Wirecard? | Why did Wirecard go Bust? | Accounting Fraud WDI.DE Scandal

Todays video is all about the Wirecard Scandal. Wirecard a German payments company announced that they are filing for insolvency this morning. We will learn what happened at Wirecard, what Wirecard does, and how they became the new Enron. Why did Wirecard go bust? WDI.DE

Dan McCrum, at the Financial Times, has been reporting that German fintech company Wirecard was faking some of its revenue, and Wirecard has been angrily fighting back, accusing McCrum of conspiring with short sellers to push down its stock.

Last week Wirecard disclosed that some of its cash was missing, and finally this week admitted “that there is a prevailing likelihood that the bank trust account balances in the amount of 1.9 billion EUR do not exist.”

So what is Wirecard? It is a firm launched in the late stages of the dotcom boom in 1999 as a payment processor, helping websites collect credit card payments from customers. They almost went bust and in 2002 Markus Braun, a former KPMG consultant, took over as chief executive.

In March this year, Wirecards auditor was unable to conclude the audit. In April their accounting firm said that they could not verify that arrangements responsible for “the lion’s share” of Wirecard profits reported from 2016 to 2018 were genuine. On June 18th Wirecard announced that 1.9 billion euros was missing and the next day Markus Braun the CEO Resigned.

On June 22nd Wirecard acknowledged that the €1.9bn of cash probably does “not exist”. The next day Markus Braun was arrested and today Wirecard announced that they would file for insolvency.

Freelancers around the world are unable to access their money from their prepaid Payoneer card thanks to a recent Wirecard scandal.

The German audit watchdog has told prosecutors on November 26th that EY may have acted criminally during its work for Wirecard, a step that significantly escalates the legal and reputational risks for the accounting firm.

According to the Financial Times, Apas, the independent government body overseeing Germany’s auditing industry, had sent a report to prosecutors. This is the first time a government agency has said EY may have broken the law during its audits of the German payments group.

[ade]

I'm actually disappointed in the German Regulatory Authority for supporting Wirecard's accounting fraud.

[benjaminlusty]

I'm here from your interview with coffeezilla. Looks like i'm not the only one! 2K new subs! Cool!

[purplepioneer]

I watched two other videos on the Wirecard scandal (including one from the financial times) Before this one. This is the only one that actually explained what happened properly. You deserve more subscribers!

[utopia]

cant believe they banned short selling on a particular security, didn't even know that was possible

[greyangelpilot]

Can we ever truly mitigate against the risk of companies who conspire, subvert, game or simply cheat market's and financial barometers/metrics (exchanges) along with their business partners/collaborators?

One must be perpetually hypervigilant in conducting due diligence on newer, growth/trendy tech entities. The number of ways in which amoral/unscrupulous startups/companies can game systems are limited only by imagination & avarice towards those who want to believe a company is greater than the sum of it's parts.

For it's truly not Markets or our current Systems which need further regulation but rather individuals with larceny in their hearts who gravitate towards business careers. They will perpetually will diminish unconditional belief along with any semblance of trust for the rest of us mere mortal, smaller trader/business entities.

Perhaps securities/laws & Regs ought to be stiffened to discourage more to "think twice" & as well as punish those who think profit at any cost? With the Global Pandemic playing out in greater unpredictable algorithms, companies who can no longer mainstain/sustain their 21st Century Ponzi Schemes will be revealed just as in 2008.

I fear the wreckage/carnage of 2020's Pandemic may well make the Financial Crises of 2008 look mild. If history's any indicator, we may be in for a global collapse of the likes we've never experienced before.

Your/anyone's thoughts on solutions to mitigate how utterly corrupted markets/companies can sustain themselves with so much systemic corruption/fraud are inherently within?

[pearcake]

This is such an underrated channel Patrick! Great content explained well :) Subscribed!

[gingyx]

You should revisit this topic. A lot more crazy information has come out about the COO.

[fellzer]

Wow. Big news companies need to hire guys like you for their long form stories. Well written, well delivered. Nice work.

[fareshajjar]

Patrick, I wish you could do a video on some famous short sellers who are active today.

[tobias]

Hi Patrick, I love your channel, you deserve many more subscribers and viewers!
Here are 2 suggestions for future videos:
1. Book recommendations
2. New developments and trends in finance that young professionals should concentrate on (e.g. AI, new products, etc.)
Keep up the great work!

[frankiemcalorum]

Great video Patrick, just discovered your channel, keep it up!

[robimae]

Thanks for the very concise and informative explanation. Glad I stumbled upon your channel. Looking forward to your future videos. More power!

[SusieAspen]

Amazing what a smooth front man can do.

[Kid_Ikaris]

Seems like there's a common thread here: if the company is blaming short sellers it's probably a scam.

[princessnicolesangabriel]

Faking revenue
Accusing short sellers to push down its stock

2002
Dito nag ceo si braun
muntik na mahuli ang wirecard
Went public by taking over listing callcenter grp to avoid the scrutiny usually applied to an IPO

2006
Moved into banking
Issue credut cards and handle the money of merchants (hybrid of banking and non banking) difficult to compare with peers pursuade investors
Shopping spree, small payments companies in asia


2015
Financial times newspaper started to question wirecard and published about the inconsistencies in the accounts

ENRON and WIRECARD
Complex corporate structure and fraudulent accountinf practices
Charismatic self dealing front man
Complaints about short sellers

False transactions
Reported 2.2 b dollars never existed

[israelescamilla]

It is assumed that the balances are deposited in a bank in the United States (First Century Bank), they would have no problems and if there were Mastercard's they would have to be responsible for solving by supporting the balance of their cards, since Wirecard is the intermediary between which you deposit and Mastercard, the balance is the responsibility of the issuer of Mastercard's or Visa cards. at the time it is deposited.
In Payonner's case, the problem will affect future payments, but the solution would be to continue processing payments without the Wirecard intermediary.
The problem is complex but Wirecard is not necessary for the payonner to continue operating this intermediary towards the commission for the use of the services out of cost and to have to divide the profits between P + Wirecard + M.
At the moment, we have to wait for the North American banks to provide a solution or at least to rule (First Century Bank).
Before we clients directly sue Payonner and Mastercard
It should be noted the responsibility that Mastercard's and First Century Bank have in all this, something that is little talked about but is a reality.

[HamzaMirofficial]

does this mean we should stay away from trade on etoro regarding this? thanks

[Salah-qucs]

Great video! Exactly what I was looking for. Thank you

[madhav.vignesh]

What will be the future of employees that too in Covid situation....

[ebertmahon]

Just joined after seeing you great chat with Coffeezilla. Great information and I am looking at your books.