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Nov. 3, 2020, 11:37 a.m. EST

German regulator criticized over Wirecard

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By Patricia Kowsmann

Europe’s top markets watchdog said it found a series of problems with Germany’s regulatory oversight and handling of Wirecard , the fintech darling that collapsed amid allegations of fraud.

The European Securities and Markets Authority said in a report Tuesday that BaFin, Germany’s financial and markets supervisor, might lack independence from the German government and proper internal controls. It pointed to key staff trading Wirecard shares, including during periods when it was investigating the company.

ESMA said both BaFin and another body, the Financial Reporting Enforcement Panel, or FREP, missed warnings raised by the press about Wirecard . The two bodies also had trouble exchanging information with each other because of stiff rules, including over confidentiality, ESMA said.

While “discovering fraud is not to a prime responsibility of the financial supervision of financial reporting,” said Steven Maijoor, ESMA’s chairman, “a better supervisory process could have increased the chances of discovering this earlier.”

An expanded version of this story is available at WSJ.com

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