Wave of Lawsuits Against Wirecard Auditors Expected
After the end of Wirecard, the wave of lawsuits from angry shareholders and creditors could turn out to be considerably larger than originally thought. A litigation financier bundles tens of thousands of claims.
In the Wirecard scandal, the wave of lawsuits from cheated creditors and angry shareholders is taking on ever greater forms.
The British litfinancier Litfin has now collected the claims of 20,000 Wirecard victims and is preparing lawsuits, “mostly” against the auditing company EY, as the company announced on request. Litfin is also examining lawsuits against Wirecard AG and its former board members. The major international law firm Pinsent Masons has been commissioned.
“We are pleased that our funding threshold has already been exceeded due to the great interest,” says Litfin. EY had checked the Wirecard balance sheets, which had presumably been falsified for a number of years, but only refused the certificate for the 2019 balance sheet. The Munich public prosecutor’s office assumes that the insolvent Wirecard group has committed “gang fraud” and puts the alleged damage to banks and other financiers at over three billion euros.
EY Germany is based in Stuttgart, but the central arena of the civil law disputes will probably also be Munich. So far, 280 lawsuits from Wirecard investors against EY have been received at the Stuttgart Regional Court, claiming around 42 million euros in damages, as a court spokeswoman said.
But the Stuttgart judges have already referred 140 of these proceedings to Munich with reference to the Code of Civil Procedure. In the case of the other lawsuits, the Stuttgart Regional Court is also examining jurisdiction. In Munich, according to EY, six lawsuits against the company have meanwhile been dismissed, but the court has not confirmed them.
Unlike a law firm, a litigation financier takes court and attorney fees. If the lawsuit is successful, the financiers then demand a high commission. 30 percent is common.
Established law firms – for whom litigation financiers are a competition – warn against black sheep. “Damaged investors have to be careful and look carefully whether the litigation financing company has enough capital to pay for litigation,” says Munich lawyer Peter Mattil, who himself represents Wirecard investors.
In the Wirecard scandal, the SdK investor community also recommended its members to use litfin as a provider of litigation. “Litfin were the only ones who also finance small investor lawsuits,” says SdK chairman Daniel Bauer. Because litigation financiers usually only step in when large amounts are involved. “Damage amounts from 1 million euros or even 10 million euros,” as Bauer says. What really impressed Litfin was the choice of the international law firm Pinsent Masons.
Litigation financing has existed in Germany for over 20 years, but it did not become a major growth business for a long time. In the meantime, however, according to experts, the number of litigation financiers is increasing.
And that is what concerns insurers like Allianz, which previously operated litigation financing itself for a short time. “In our view, the litigation financiers increase the risk in Germany that companies will be confronted with lawsuits,” says Stephan Geis. The manager heads the “Financial Lines” for Central and Eastern Europe at Allianz industrial insurer AGCS.
t from a different point of view. Litfinanciers filled “an important gap” in many cases, says a Litfin spokesman. “Because many clients of law firms or injured parties in general need someone to finance their litigation because they cannot or do not want to do this themselves due to a lack of resources.”
In the Wirecard case, the number of those willing to sue is apparently still growing, almost a year after the bankruptcy: The financing offer for injured parties is still open, says the Litfin spokesman – “and we receive a large number of new inquiries from interested parties every day”.