German Regulator Accuses Deutsche Bank Board Member Of Insider Trading Linked To Wirecard

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by Tyler Durden
Tuesday, Apr 20, 2021 - 05:45 AM

For a minute there, it appeared that Credit Suisse might have snatched Deutsche Bank's crown as the most dysfunctional bank in Europe as the Swiss lender struggled with the fallout from the Archegos blowup and the collapse of Greensill (a scandal that has set off a massive corruption scandal in the UK, and triggered renewed calls for regulatory reform in the European financial system). CS has announced billions of dollars worth of losses tied to the scandals, fired its head of risk and nearly half a dozen other senior employees, and taken other steps in an attempt at penance. But on Monday, Deutsche Bank, which seemingly can't go more than couple of quarters without a scandal, has found itself in the headlines once again.

This time, Germany's financial watchdog BaFin has filed a criminal complaint against Deutsche Bank board member Alexander Schutz over alleged insider trading tied to shares of Wirecard - the bankrupt erstwhile German fintech darling whose fraud-induced slide into bankruptcy has shaken Germans' faith in prosecutors and regulators, even as the criminal protection of several key players continues.


Prosecutors in Munich, who have been handling most of the criminal actions related to Wirecard, told the FT that they had received a criminal complaint regarding Schutz from BaFin on Monday, and that they were awaiting more details. Once all documents have been received, they will release more information to the press.

Schutz has emerged as an important figure in the Bundestag's inquiry into the collapse of Wirecard. Deutsche Bank officially censured Schutz over an email he sent to former Wirecard CEO (now facing a host of criminal charges tied to the firm's collapse) Markus Braun urging him to "do this newspaper in!!" - a reference to a report in the FT about new allegations of accounting fraud at Wirecard. Incidentally, BaFin nearly helped Braun and Wirecard accomplish just that, after BaFin ordered a ban on Wirecard short-selling and promised to investigate allegations that the FT was working with short-sellers to sabotage Wirecard shares.

Formerly a close confidant of Braun, Schutz has already promised to step down from Deutsceh Bank's board next month. It's not clear exactly how, but the FT said Schutz took advantage of insider information when he traded on Wirecard shares in both 2019 and 2020.

According to people with first hand knowledge of the matter, BaFin suspects he used inside information on several occasions in 2019 and 2020 when trading Wirecard shares. Bloomberg earlier reported that BaFin was probing potential insider trades by Braun.

That seems to suggest that Schutz may have used his connections to sell Wirecard shares before they finally slid all the way to zero, helping him avoid a potentially massive loss. Though the exact nature of the trades is unclear.

As the world learned after Wirecard's collapse, Deutsche Bank at one point considered a merger with Wirecard, though the deal fell apart before it could be consummated.

Nearly a year after it filed for bankruptcy after a new outside audit exposed a $2 billion hole in its balance sheet, Wirecard remains a hot topic in Germany, where the company's deep ties to Chancellor Angela Merkel's ruling coalition are only just beginning to be explored. Merkel herself will appear later this week before the Bundestag committee tasked with exploring why the country's regulators failed to spot Wirecard. Olaf Scholz, Germany's finance minister, will also appear. Their testimony, coming five months before a critical election, will be closely watched.