Wirecard scandal puts regulators, EY in hot water

Fallout from the collapse of Wirecard keeps spreading.

The German payments firm declared insolvency earlier this week, owing almost 4 billion dollars to creditors.

Now Germany’s financial regulator, BaFin, could be in trouble.

The European Commission has asked its markets watchdog to investigate whether it failed to protect investors.

If BaFin is found in breach of its duties, it could be ordered by Brussels to make changes to its practices.

That would be a rare and humiliating rebuke for a national regulator.

Meanwhile, Wirecard’s auditors are in hot water too.

EY says a 2.1 billion dollar hole in the firm’s accounts is the result of sophisticated fraud.

But investors want to know why they didn’t spot the problem earlier.

German media reports say Japan’s SoftBank plans to sue EY.

The tech investment giant put money into Wirecard only last year.

It’s all shaping up to be one of Germany’s biggest corporate scandals.

Wirecard is the first-ever member of the country’s blue-chip Dax stock index to go bust.