The previously secret “Wambach Report”, in which special auditors accuse the auditors of EY (formerly Ernst & Young) for serious omissions in the preparation of the certificate for the annual balance sheets of Wirecard AG, was published last week.

In the opinion of lawyers and investor advocates, this has increased the chances of success in lawsuits by injured Wirecard shareholders.

Marcus Jung

Editor in business.

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What does this mean for damaged Wirecard investors?

So far, small shareholders faced the dilemma with their lawsuits against the auditors that they lacked important information about the activities of Wirecard's auditors.

In German civil courts, however, the plaintiffs have to prove and explain their alleged claims.

Some things could be gleaned from the final report of the parliamentary committee of inquiry, which has been publicly available since June.

However, the Bundestag refused to publish the Wambach report.

From the point of view of investor protectors, the report will simplify the proof of the misconduct by EY and also make the whole thing much easier with regard to the proof of the conditional intent, says Daniel Bauer, CEO of the SdK Protection Association of Capital Investors.

Is the auditor's liability limited?

According to the Commercial Code, the auditors are liable for EY for any culpable breach of their duties.

However, only to the audited company itself. It was not until the so-called Wirecard Act that liability for auditors was significantly tightened in the summer.

In the case of negligence in listed companies, it is now 16 million euros; if gross negligence can be proven, the upper limit does not apply to listed companies.

In their lawsuits against EY, private investors would have to concentrate on tortious claims for damages, but in order to do so, they would have to prove “deliberate immoral damage” to the auditors.

Are the lawsuits against EY successful?

So far, the law firm Wirsing Hass Zoller has managed to fend off claims for damages against EY.

According to a spokeswoman, there have been 115 dismissals in the 650 pending Wirecard lawsuits at the Munich I Regional Court.

In Stuttgart, too, where the corporate headquarters of EY Germany is based, plaintiffs have so far been on a losing streak.

As of last Friday, 320 investor lawsuits had been received there against EY, the regional court spokeswoman confirmed.

Because the lawsuits concern the allegation of "willful immoral damage", the Swabian judges consider the Munich court to be exclusively responsible.

Anyone who files a lawsuit in Stuttgart nonetheless risks being dismissed for inadmissibility.

Can investors benefit from a lawsuit from the liquidator?

For months, insolvency administrator Michael Jaffé has had a lawsuit against EY examined by the auditing company Warth & Klein.

This emerges primarily from his internal report to the Wirecard creditors' committee from the spring, which the Handelsblatt reported on.

"We can confirm that Warth & Klein Grant Thornton is working for the insolvency administrator of Wirecard AG," a spokesman for Jaffé told the FAZ on Monday when asked.

He did not want to provide any information about the content of the order.

Investors who have filed their claims with the liquidator should rely on the perseverance of Jaffé.

He has already successfully fought several liability lawsuits in the past, which increased the bankruptcy estate.

Has there already been a mass lawsuit against EY in Germany?

In June 2020, the Tilp investor's office applied to LG Munich I to initiate model investor proceedings (KapMuG) against EY.

"We are convinced that the EY auditors, due to inadequate investigations, have done their tasks inadequately and negligently, and that they have given offensive information," says Tilp.

Numerous plaintiffs could benefit from the findings in a pilot case against EY.

Media reports that the Munich Regional Court rejected the KapMuG application is contradicted by the well-known investor's office.

A decision is still pending.

We are waiting eagerly to see whether the model lawsuit will come about, explains SdK board member Daniel Bauer.

What are investor advocates planning?

The community of investors has teamed up with litfin, the litfin.

The financier advances the court fees and the fees for the litigation firm Pinsent Masons and, in the event of success, withholds part of the sum won.

According to Bauer, 4,600 people affected have come together with a volume of around 160 million euros.

Litfin itself advertises in the case of the EY lawsuit with 32,000 registered claimants and claims of 650 million euros.

In addition, the German Association for the Protection of Securities (DSW) has set up a Dutch foundation that is to come to an agreement with EY.

If this fails, there will be a class action in which the registered claimants from Germany will take part.