Litigation funder Omni Bridgeway has announced it is planning to fund potential litigation on behalf of shareholders in failed German payments processor Wirecard.

The litigation, which is proposed against Wirecard’s former auditors Ernst & Young (EY), follows the collapse of the German-based technology group in June after EY discovered that €1.9bn in cash receipts could not be traced. None of Wirecard’s previous audits had been qualified. 

Wirecard subsequently admitted that the €1.9bn probably did not exist, triggering a 95% fall in the value of the firm’s shares and its subsequent insolvency, with senior executives and leadership at the firm arrested for alleged fraud by German law enforcement authorities. 

Jeremy Marshall, a senior investment manager at Omni Bridgeway, said: “Shareholders have understandably relied increasingly heavily on the audited financials of Wirecard.”

He added: “The nature of the Wirecard insolvency is such that it was inevitable that serious claims would be levelled against the auditor.” 

The funder, he said, aimed to provide shareholders with possible redress, given that prospects of any recovery against Wirecard were limited. 

The litigation is not the only such class action against Wirecard—a separate claim was filed by specialist class action lawyer Wolfgang Schirp, of Schirp & Partners, in June—but both Quinn and Omni Bridgeway have experience in big claims, having worked together on the VW class action. Nadine Herrmann is the lead partner in the Wirecard claim.

Wirecard’s financial situation had been the subject of long-running market scrutiny, including by the Financial Times, which helped break initial and ongoing concerns about the DAX-listed company.

The firm’s Asian operations had been the subject of an external review by Rajah & Tann, a respected Singapore law firm, as well as a special audit by fellow Big Four accountants KPMG. 

Speaking to the FT, Anna Leiding, a Munich prosecutor, said that €3.2bn had been invested into Wirecard, adding: “Due to Wirecard’s insolvency, those funds are most probably lost.” 

Wirecard is currently under administration, being led by insolvency lawyer Michael Jaffé of eponymous law firm Jaffé Insolvency Lawyers. it was previously represented by leading German independent firm Noerr.  

Other law firms understood to be advising on Wirecard-related matters include Clifford Chance, Allen & Overy and Gibson Dunn & Crutcher, while individual criminal and regulatory proceedings are ongoing. 

In a statement, EY said there were “clear indications that this was an elaborate and sophisticated fraud, involving multiple parties around the world in different institutions, with a deliberate aim of deception.”

It argued that “even the most robust audit procedures may not uncover this kind of collusive fraud.” It denies liability.