On February 18, 2019, the German Federal Financial Supervisory Authority (BaFin) issued a general administrative decree prohibiting the creation and increase of net short selling positions in shares of Wirecard AG (DE0007472060).
On February 18, 2019, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin) issued a general administrative decree prohibiting the creation and increase of net short selling positions in shares of Wirecard AG (DE0007472060). The ban also applies to net short selling positions created or increased intraday. The general administrative decree applies until 18 April 2019, 12.00pm CET. Net short positions already created before 18 February 2019, 6:00am, are not covered by the ban and have to be disclosed as usual.
The General Administrative Decree is based on Article 20 of EU Regulation No 236/2012 (EU Short Selling Regulation) according to which BaFin, as the competent authority for regulating short selling in Germany can take measures in case of harmful events or developments which constitute a serious threat to financial stability or market confidence in Germany. It is the first time under the EU short selling regime that BaFin makes use of this measure.
Wirecard AG is a global payment service provider domiciled in Germany. The shares of Wirecard AG are admitted to trading on the Frankfurt Stock Exchange and are included in the DAX.
Since the end of January 2019, various negative press reports have been observed. In the past two weeks, the exchange rate of Wirecard AG shares has decreased considerably. Since 30 January 2019 the share price of Wirecard AG dropped by 40%. The last reduction followed a publication of a press article stating that employees of a subsidiary of Wirecard AG in Singapore had faked higher sales through accounting manipulations. The press report coincided with a substantial increase in net short positions combined with a high volatility of the Wirecard AG share. Similar situations occurred already at the begin of this year.
BaFin has now come to the conclusion that there is a risk that new or increases of existing net short positions may lead to excessive price fluctuations of the share price of Wirecard AG which may also have an effect on the general market. In order to avoid any turbulences of the market, BaFin published the prohibition.
The BaFin decree coincides with investigations initiated last week by the German prosecutor in relation to market manipulation.
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