German financial supervisor Bafin told AFP Tuesday it had filed charges with Munich prosecutors over alleged manipulation of financial technology firm Wirecard's share price involving short-selling. "We have filed charges. on suspicion of market manipulation in the form of a short attack on shares of Wirecard AG," a spokeswoman for the Frankfurt-based watchdog said, partially confirming a report by Der Spiegel magazine.
Bafin did not give any details of the people charged. But Munich prosecutors said that "fewer than 10 people" were targeted, adding that it could not give further details "for tactical reasons related to the investigation". The payment processing company's stock plunged 40 percent between late January and mid-February, after a series of Financial Times articles alleged fraudulent accounting in its Asian division.
The sharp stock moves prompted Bafin in late January to open a probe into whether Wirecard could be the victim of market manipulation to the benefit of short-sellers, and ordered a ban on the practice in relation to the firm's shares in mid-February. Short-sellers borrow shares, sell them on the market and later buy them back. If the price of the shares has fallen, the difference in price is profit for the short-seller, making the practice in essence a bet on falling stock prices.