Your road to IPO at Deutsche Börse

Shape your company’s future with a listing in Frankfurt

As one of the largest international exchange organisations, Deutsche Börse helps your company gain access to the global capital pool you need to finance dynamic growth. Read more

DVFA Commission for Corporate Analysis: Wirecard – Anatomy of a Fraud

On Thursday, June 25, 2020, Wirecard became the first member of the DAX benchmark index to file for insolvency. Since then, three questions concern the investment community: Why was Wirecard’s fraud not uncovered earlier? Could Wirecard’s fraud have been detected earlier? What lessons can be learned from Wirecard’s fraud? The DVFA Commission for Corporate Analysis took a closer look at this unique case in the history of the German capital market.

Why was the Wirecard fraud not uncovered earlier?

The primary perpetrators are well networked and generally first-time offenders. Board criminals are people who nobody would typically suspect of committing fraud. At the same time, board fraudsters are extremely careful when it comes to manipulating or destroying evidence requested by auditors. Apparently, for Dr. Braun, it was relatively easy to manipulate auditors, who were perhaps overwhelmed by the complexity of the client. Thus, it is common practice for auditors to simply repeat the work done in the previous year. They simply do not have the time to question details or even the big picture.

But it is not only time that is scarce, but also conviction. After all, the confirmation bias theory already shows that a client who has survived the auditor’s rigorous examination process in previous years must be trustworthy.

Could Wirecard’s fraud have been detected earlier?

As in 2001 and 2008, statements are now being made everywhere as to why the scandal was foreseeable. This reveals a defect known in Behavioural Finance as hindsight bias. Hindsight bias leads to an event appearing more predictable after it is known than it actually was before. In extreme cases, there could be investors who still believed that Wirecard’s insolvency was foreseeable even though they still held shares of the financial services company in their portfolios.

Now, capital market participants are by far, not the only ones subject to hindsight bias. There are numerous scientific studies and meta-studies on this phenomenon, ranging from the assessment of the chances of success of start-ups to the election chances of top political candidates to the results of sports competitions, the occurrence of terrorist attacks or the announcement of medical diagnoses. What they all have in common is that those who succumbed to the hindsight bias would have made a different decision in retrospect than they actually did at the time of the decision. Irrespective of this, the phenomenon is difficult to convey to experienced decision-makers, in the case of Wirecard, fund managers and financial analysts.

What lessons can be learned from Wirecard’s fraud?

Fraud patterns have changed little over the past 300 years. Just like back then, fraud today consists primarily of two elements: The “Suggestio Falsi”, i.e. the insinuation of falsehood, and the “Suppressio Veri”, the suppression of truth. While criminal investigators, as noted above, are trained to think like criminals in order to catch criminals, this approach is fundamentally atypical for financial analysts and asset managers. Instead, many actors, especially in the financial sector, tend to neglect behavioural explanations for inconsistencies. Since the consequences of fraud, as shown by Wirecard, can be so severe, it would make sense to place additional training emphasis on behavioural epistemology, not only for the detection of fraud but also as a deterrent. In other words, if we want to discuss the crime itself, we must inevitably include the human factor of the criminal.


The complete publication can be found on the website of the DVFA – Commission for Corporate Analysis or downloadable here as a PDF file (in German only).

Text: © 2020 DVFA e.V.

European Digital Week 2020: Fintech & Digital Banking Innovation Conference

The modern digital technologies are impacting traditional banking models and consumer expectations. More and more people are paying their bills using a smartphone instead of going to the nearest bank branch.

From 21 to 26 September 2020, one of the biggest events in the scope of digital technologies called “European Digital Week” will take place virtually.

The virtual event “Fintech & Digital Banking Innovation Conference” on 24 and 25 September 2020 is a part of European Digital Week 2020. Participants will have a chance to learn more about the latest innovations in this field. Lecturers of the conference are professionals with huge practise experience at the Conference. They will discuss important topics like future trends in the Fintech industry and new advances in processes and technology to improve overall banking experience.

Some of the topics that will be presented at the conference are:

    • Reinvent the Financial World
    • The Future of the Service Sector
    • GreenTech
    • Future of FinTech under Covid-19
    • Reinvent the Financial World
    • Innovative Digital Platforms in Cashless Society
    • SEA Insurance Market and Digital Transformation
    • Financial Crimes and Digital Forensics

Find out more about the speakers and schedule of the event here.


Bloomberg Launches Proprietary ESG Scores

Scores will provide transparent, data driven insights into company performance

Bloomberg recently announced the launch of proprietary ESG scores. This initial offering includes Environmental and Social (ES) scores for 252 companies in the Oil & Gas sector, and Board Composition scores for more than 4,300 companies across multiple industries.

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The podcast series offers a wide range of unique insights regarding how the FX market today is developing.

As a technology provider for the global foreign exchange market, 360T interacts daily with a wide spectrum of international financial institutions that contain a wealth of expertise, knowledge and insight regarding the world’s largest asset class. In their podcast series 360T looks to tease out just a fragment of this information inviting their listeners to join an exchange amongst industry professionals with each episode.

The episodes themselves consist of short, informal interviews with senior figures from market-leading firms within the FX industry, exploring some of the key trends and themes they see impacting the market today. Tracing the evolution of technology, liquidity, credit, data analytics, market structure, trading strategies and more, the podcast series offers a wide range of unique insights regarding how the FX market today is developing around us.

Further informations can be found on the Website of 360T.



Image: Daniel Friesenecker/Pixabay

Berlin fires the starting shot for federal green bonds

Debut with ten-year maturity in September – 2020 volume up to 11 billion euros

Green Bunds will soon see the light of day. The debut issue is to take place as a twin bond with a minimum volume of 4 billion euros and a term of ten years as early as September, Finance State Secretary Jörg Kukies announced to the press in Berlin. According to reports, this may even be a very short term issue. The bond will be launched on the market via a bank syndicate. The fourth quarter should see another green Bund come on the market. A five-year maturity is planned. According to Kukies, the federal government will thus be able to issue up to 11 billion euros this year via green Bunds.

“From now on, the federal government will issue green federal securities every year,” announced Kukies. “This will give strong support to strengthening the sustainable finance market.”

According to the State Secretary, actual green expenditures from the 2019 federal budget of up to 12.7 billion euros can be allocated for the planned emission. Kukies mentioned the areas of transport, environment, international cooperation, research, energy and industry as well as forestry, natural landscape and biodiversity. This would provide security for investors, Kukies emphasised, “There’s green in this, too.”

According to the Finance Agency, the German government’s new green securities will always have the identical characteristics of an existing conventional government security (i.e. same maturity and coupon). With the concept of these twin bonds, the German government aims to issue green twins for standard maturities of the conventional curve and to create added value for the sustainable finance market in Europe. In the future, the Federal Government will be able to offer investors different maturities and create additional added value for the sustainable finance market with a green euro interest rate benchmark.

“The twin concept offers the opportunity to take green bonds out of their niche by allowing a broad range of investors to get involved in the green bond market,” said Tammo Diemer Co-Managing Director of the German Finance Agency.


Source: Börsen-Zeitung, 25 August 2020, Kai Johannsen, Angela Wefers, © All rights reserved.

Image: Gerd Altmann/Pixabay

Eintracht Frankfurt and the TechQuartier are looking for students for the third edition of TechTalents!

With its two-month trainee curriculum, TechTalents seeks to empower the next generation of business leaders that have an eye on innovation, technology and entrepreneurship.

The TechTalents program is an education program founded by TechQuartier and Eintracht Frankfurt and offers bright, motivated students a unique environment to learn real-world skills beyond the everyday university experience. Read more

Just the first step – Comment by Christopher Kalbhenn in the Börsen-Zeitung

On Monday, 24 August 2020, the DAX will finally be Wirecard-free. Following a rule change adopted by Deutsche Börse, in the future shares of insolvent companies will be immediately removed from the DAX family of indices, which in the case of Wirecard will happen on 21 August 2020, after the close of trading. The decision to accelerate the removal of Wirecard was unavoidable. After all, given the enormity of the balance sheet fraud scandal, it was unacceptable for the stock to continue to spoil the blue-chip index, which is a figurehead of the German economy, well into the next month.

Wirecard is also unworthy of DAX membership because of its plummeting share price and the resulting free-float market capitalization, which is far too low for the index, as well as the enormous daily fluctuations of the share. Wirecard has degenerated into a gambling stock that no longer has anything to do with solid investments. The stock is an imposition for market participants, especially for those who operate index-matching products and are therefore forced to hold the company.

As welcome as the decision is, it is ultimately just a first step. A more detailed review of the rules and regulations announced by Deutsche Börse, who will present the results before the end of this year, must lead to further changes in order to reduce the risk of further damage to the company’s reputation. Corporate governance aspects must also be taken into account.

What would happen, then, if Wirecard had not gone into insolvency after admitting that the reported EUR 1.9 billion did not actually exist? Assuming that the market capitalization and sales criteria were met, the stock would have continued to qualify for one of the select indices, as already happened in the Steinhoff case. The management of the retail furniture group, which went public in Frankfurt in 2015 and whose shares were temporarily one of the largest MDAX stocks, was shown to have fraudulently inflated its balance sheet. However, the company was able to avoid insolvency. The share price collapsed, and the stock dropped into the SDAX. In December 2019, it was removed from the index, to be later reinstated in March of this year. These events must not happen again. Proven balance sheet fraud must lead to exclusion from the index and a ban for several years.


Source: Börsen-Zeitung, 14. August 2020, Christopher Kalbhenn, © All rights reserved.

Image: Gerd Altmann/Pixabay

High-Level Virtual Conference by the Union of Arab Banks

The Union of Arab Banks (UAB), the World Union of Arab Bankers (WUAB), the Arab Federation of Exchanges (AFE) and Frankfurt Main Finance (FMF) invite you to a virtual conference on “Central Banks Support to Financial Capital Markets in the Coronavirus Pandemic” on 1 September 2020 from 3 pm (CEST)  and 2 September 2020 from 11 am (CEST).

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Survey: Arab Banks should make decisions now to handle Brexit

The vast majority of banks from Middle East countries have not yet decided whether business units will be relocated from Great Britain to the European Union after Brexit or whether representative offices will be established in the EU in parallel. This is the result of a survey conducted by the Union of Arab Banks (UAB) among its members, in cooperation with Frankfurt Main Finance.

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