Wirecard slumps after report on executive suspected of fraud

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Wirecard AG shares dropped as much as 25 percent after a report that a senior executive at the payments company was suspected of using forged contracts for several suspicious transactions.

An internal presentation last year described potentially fraudulent flows of money at the company, the Financial Times reported, citing a copy of the document. The transactions were allegedly ordered by an executive who oversees Wirecard’s accounting in the Asia-Pacific region, according to the FT.

“Today the Financial Times has published a false, inaccurate, misleading and defamatory article,” Wirecard said in a statement on Wednesday. “This article lacks any substance and is completely meaningless.”

Wirecard slumped to 146 euros as of 4:50 p.m. in Frankfurt. The fall is the biggest intraday drop since February 2016.

The Germany company has been trying to expand outside its home markets, and it pushed into the U.S. in 2016 when it bought Citigroup Inc.’s prepaid card business. The following year, Wirecard agreed to another deal for Citigroup’s Asian payment processing businesses. Wirecard’s banking arm is an issuer of Visa- and Mastercard-branded cards.

"It is the same as we have seen before," said Markus Friebel, analyst at Independent Research. "Allegations come out and we don’t know if they are true or not. The share price reaction confirms our view that the company is overvalued."

Last year Wirecard replaced Commerzbank AG as a member of the DAX. Founded in 1999, Wirecard initially catered to online gambling and adult websites, and barely survived the dot-com bust, but has since seen its share price soar, despite a series of fraud allegations.

In 2016 an online report from Zatarra Research & Investigations alleged senior management at Wirecard was involved in money laundering and facilitating the evasion of U.S. restrictions on online gambling. Wirecard refuted the allegations.

In December Munich prosecutors ended a market-manipulation probe into the report, and asked a Munich court to impose a fine on one of the suspects behind the report by Zatarra Research. In 2008 Wirecard’s shares plunged after speculation about the company’s accounting.

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