"(Bloomberg) -- Germany’s BaFin [Like their SEC] was sued by Wirecard AG investors who say the regulator turned a blind eye widespread evidence of an accounting scandal that led to the company’s collapse.
Lawyer Andreas Tilp, who filed the suit in Frankfurt, said the regulator should have been aware of the financial problems engulfing the payments processor early last year.
Prosecutors arrested former Wirecard Chief Executive Officer Markus Braun a second time this week over allegations the company covered up massive losses by inflating the balance sheet with fake assets. Regulators and prosecutors have been criticized for ignoring media reports about the company’s financial problems for more than a year.
“BaFin grossly neglected its duties and powers by refusing to investigate Wirecard AG for market manipulation, while taking biased action against journalists and short sellers,” Tilp said in a statement Friday. If Bafin had “properly investigated the matter,” any wrongdoing would have come to light earlier, he said.
Bafin questioned whether the lawsuit was legal, saying that the agency works on behalf of the public interest rather than investors.
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