Embattled payment service company Wirecard (WDI) is set to be ousted from the DAX index following the company’s declaration of insolvency.
Wirecard AG (ETR: WDI) the renowned European payment service provider declared insolvency back in June following a $2 billion loss discovered by auditors in the company’s accounts. Following this development, Wirecard (WDI) is getting prepared to be ousted from Germany’s blue-chip DAX selection index.
This move was made known by the Deutsche Boerse Group after announcement that it will be changing the selection rules that will allow it to remove insolvent companies from the DAX with two trading days’ notice. The rule change is scheduled to become effective on the 19th of August and implementation to start after the close of trading on the 21st of August. The group noted that the rule change will apply to Wirecard (WDI) “given the current situation.”
How Wirecard (WDI) Became Drawn up For Ousting
As reported by Coinspeaker, Wirecard became the subject of the London-based Financial Times report in January 2019. Back then, the media outlet reported that a senior executive was suspected of “falsification of accounts” and “money laundering” in the company’s Asia-Pacific operations. The wild claims were refuted by the company followed by a lawsuit filed against the Financial Times citing “unethical reporting” and market manipulation.
Not long ago, the alleged unethical reporting became real as Ernst & Young auditors discovered a missing €1.9 billion from Wirecard’s balance sheets. While this revelation was expected to come as a shock, the Financial Times earlier report seemed to have prepared stakeholders for this eventuality.
The missing cash discovery was succeeded by a series of events including the plunge in the stock price of Wirecard (WDI) by almost 70%, the restriction of the company customer’s accounts to aid investigating authorities, the resignation, arrest of former CEO, Markus Braun and the declaration of insolvency by the embattled company
The plan by Deutsche Borse to delist Wirecard (WDI) from the DAX selection index is the latest offset the company will have to battle.
The Wirecard’s Delisting Plan is Not a Witchhunt
The decision by Deutsche Borse to delist Wirecard is not a witchhunt as the process followed progressive consultations and it will cut across insolvent companies in Germany and the rest of the European Union.
The announcement reads:
“The new rule pertaining to insolvent companies was determined in a market consultation between 17 July and 7 August. Specifically, the amendment refers to the opening of insolvency proceedings as a procedure laid down by law and includes all relevant public notices in this respect. Since companies from other EU countries can also become index members, the rule does not only refer to German insolvency law”.
Beyond this initial framework to deal with such insolvent companies as Wirecard the DAX index also confirmed it will be making an in-depth review of the rules through ‘another extensive market consultation’ which will be launched sometime in September and results will be made known by the end of the year.
Wirecard (WDI) was once an enviable European payment service provider brought to the limelight by Markus Braun, the purported architect of the company’s fall. As noted by the CNBC, it became listed on the DAX back in 2018 when it replaced German lender Commerzbank.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
