KPMG Knocks Wirecard Leaving Shorts With Over $1 Billion In Profits

This week, Wirecard AG WCAGY shares slumped after the firm failed to successfully address concerns about accounting discrepancies.

This comes after KPMG International was hired to address allegations regarding fake transactions and inflated revenue numbers.

As a result of the investigation, KPMG could not verify revenues for the years spanning 2016-2018 because Wirecard did not provide the documents requested.

"We cannot make a final judgment on whether the documentation and information are complete, correct and free of contradiction," KPMG said in a 58-page report.

As part of the development, Wirecard shares plummeted, leaving short position holders with over $1 billion in profits.

In a statement on the development, Peter Hillerberg, Co-Founder and CTO of London-based ORTEX Global Equity Analytics told Benzinga “ORTEX data shows that over 20 million of Wirecard’s shares are on loan, these shares can now be bought back €50 per share cheaper, making a total profit of over 1 billion euros for the short-sellers.”

According to Hillerberg, flagged short-sellers include Marshall Wace LLP, Slate Path Capital LP, TCI Fund Management Limited, as well as Viking Global Investors LP.

“Our data shows that some of the asset managers have already started to realize the profits, although a majority of short-sellers have increased their short positions even after the recent price drop.”

Alongside the development, activist investor Christopher Hohn of TCI called on Wirecard to remove CEO Markus Braun as a result of the firm’s mismanagement.

“In our opinion, the necessary intervention is now to remove the CEO from all management duties,” Hohn said.

In response, the chairman of Wirecard’s supervisory board, Thomas Eichelmann, voiced his support for Braun, stating “I do not see a removal of Dr. Braun at the moment.”

To keep up with the latest on this development, visit Benzinga.com.

Photo courtesy of ORTEX.