Germany bans short selling of Wirecard stock
February 18, 2019
German and European financial market regulators banned short-selling shares of German payment services company Wirecard on Monday following weeks of turbulence in its share price.
German regulator BaFin said continued short selling — a type of trade that bets on a share price dropping in the near future — could negatively impact the wider market. Short sellers started targeting the stock in earnest after a newspaper report of fraud at the company.
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The European Securities and Markets Authorities (ESMA) said it supported the decision as "appropriate and proportionate."
The ban, BaFin's first to apply to a single company stock, caused a 13.1 percent hike in Wirecard's share price to €113 ($127.24) in Monday trading.
The company welcomed "all measures" that would help to "quickly clear up" recent events.
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Allegations, counter allegations
The move came the company's share price dropped from a high of €199 in response to reports in Britain's Financial Times newspaper accusing Wirecard of fraud.
The company has dismissed the allegations as "defamatory" and vowed to sue the newspaper.
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BaFin and German prosecutors have since expanded a probe into irregularities at Wirecard to examine allegations that a Financial Times journalist committed market manipulation. The journalist is suspected of notifying someone about Wirecard's irregularities before the Financial Times published an accompanying article.
The newspaper said the allegation was "baseless and false."
Based in Munich, Wirecard offers various payment services for banks and other types of financial institutions.
amp/msh (AP, Reuters, AFP, dpa)