[HN Gopher] Wirecard CEO exits as search for missing billions hi...
___________________________________________________________________
Wirecard CEO exits as search for missing billions hits dead end in
Asia
Author : hhs
Score : 326 points
Date : 2020-06-19 11:48 UTC (11 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| Mordan wrote:
| Someone explain to me why MS was forced to allow competing
| browsers and today Apple forces you to use their own browser
| engine?
|
| Isn't that a double standard?
| ubermonkey wrote:
| I mean, I can, but this is probably the wrong thread.
|
| You're also slightly off about "allowing" competing browsers.
| MS never limited other browsers in Windows; you were always
| free to download another (and there were others). It just gave
| IE an absurd inside track by including it FREE with Windows and
| making it the default, which was hugely damaging to Netscape
| (which, at the time, was charging money for a browser; yes,
| this sounds bananas today).
|
| This was a textbook example of monopolistic behavior, since at
| the time Microsoft OWNED computing. There wasn't another viable
| platform. The Mac was, at the time, circling the drain. Desktop
| Linux didn't exist. If you wanted a computer, you ran Windows,
| full stop. MSFT was leveraging their enormous monopoly power to
| give them a monopoly in _another_ market (browsers), and that
| 's a big anti-trust no-no.
|
| Apple has nowhere near that kind of market power. The iPhone is
| a _minority player_ in a huge market -- much bigger than the PC
| market Microsoft dominated in the 90s. Android holds a majority
| position there.
|
| This means Apple doesn't have a monopoly. You can, and people
| do, buy something else that allows you do configure basically
| whatever you want. Apple isn't distorting or damaging the
| phone/mobile market with their behavior, as MSFT was.
|
| Apple definitely DOES have enormous influence and power in
| mobile computing. That's very true. But because they are a
| minority player, they don't _control_ the market. And so there
| 's no real legal argument on antitrust grounds to compel them
| to do anything differently.
| saberdancer wrote:
| Was this an issue just because Netscape charged for their
| browser?
|
| Microsoft includes a lot of stuff with the OS, from
| calculator, file manager, rudimentary word processor, ... How
| is a browser any different? I understand now we know that the
| ads and search engine control became vital but I doubt it was
| predicted at the time. Maybe the regulators believed MS was
| trying to get Netscape out of the business only to start
| charging a premium for IE.
| rrdharan wrote:
| Desktop Linux definitely did exist. I distinctly remember
| running Slackware with a pirated AccelX server in fall 1997
| and messing around with Red Hat (first released in 1995)
| around that time. The lawsuit was filed in 1998 and arguments
| were in 2000/2001.
| josefresco wrote:
| I think this is the wrong thread bub
| easytiger wrote:
| Slightly awkward tweet from him:
|
| > We are overachievers. Wirecard's business is going strong into
| the future and we are very much looking forward to a successful
| year.
|
| https://mobile.twitter.com/_MarkusBraun/status/1228257269567...
| pieterhg wrote:
| Old tweet
| easytiger wrote:
| Feb this year. Not old.
| umeshunni wrote:
| Well, he said pretty much the same thing today: https://mob
| ile.twitter.com/_MarkusBraun/status/1273974132531...
| noneeeed wrote:
| Can anyone recommend a good overview read of this whole thing? I
| seem to have missed it all.
| fluffything wrote:
| There is none yet, but there is enough material for a Netflix
| mini-series.
| adventured wrote:
| And there's Masayoshi Son and SoftBank, plowing $1 billion into
| Wirecard a year ago, for a 5.6% stake.
|
| Mr. Enabler seems to have secured a prime seat for many of the
| big frauds & scandals in tech from the past few years.
|
| At this point regulators should just be tracking SoftBank to
| watch where they've stuffed the Saudi money (or in this case,
| it's a very unusual UAE & SoftBank financing arrangement).
|
| Bloomberg story out right now:
|
| "The meltdown at Wirecard AG is raising questions about the
| company's complicated relationship with the troubled SoftBank
| Group Corp."
|
| http://archive.is/ipWck
| easytiger wrote:
| My favourite SoftBank investment was the automated pizza van
| thing.
|
| I can only hope SoftBank had shares in a failing robotics
| company that it needed to funnel money to
| mtmail wrote:
| "Pizza robot makes 300 pizzas per hour"
| https://news.ycombinator.com/item?id=21127795
|
| "SoftBank's $375M bet on pizza went bad fast"
| https://news.ycombinator.com/item?id=22337057
| Danieru wrote:
| The pizza van guy was active here on hacker news right? I
| remember seeing posts from a robot pizza guy. Shame they got
| caught up with softbank.
| easytiger wrote:
| I don't think being caught up with SoftBank is the issue.
| More that SoftBank have a subset of very negative
| indicators in their selection process
| Nasrudith wrote:
| It seems that lack of a remotely viable businesses model
| and trying to scale things that don't are are common
| SoftBank flaws. Like WeWork and the countless scooter and
| ride share at a loss companies with little true barrier
| to entry and can hardly pay for themselves while
| infamously underpaying their workforce.
| ReptileMan wrote:
| Either SoftBank is some brilliant money laundering scheme or
| them investing in something is sure sign it would fail.
|
| I haven't heard of any good investment they have made.
| runeb wrote:
| Alibaba? They turned $20 million into $60 billion with that
| one.
| qeternity wrote:
| Broken clock is right twice a day.
| jansan wrote:
| Anyone remember L&H, the famous computer translation company that
| went bankrupt in 2001? At one point they had a whopping market
| capitalization of almost 10 billion US$!
|
| IIRC they also claimed that a large sum of money somehow got
| missing in Asia (South Korea I think). But given that the
| management actually went to jail, it seems the fraud actually
| originated in their headquaters in Belgium.
| easytiger wrote:
| I didn't when you wrote L&H, but on searching and finding it
| was
|
| https://en.m.wikipedia.org/wiki/Lernout_%26_Hauspie
|
| I do indeed remember them and their software.
| aashu_dwivedi wrote:
| I didn't remember them by name but after reading the
| wikipedia page, I remember they are the company which
| acquired Drangon systems in liu of a large number of stocks.
| weinzierl wrote:
| If I remember the story correctly the founders of Dragon
| Systems sued the bank that handled the acquisition. They
| claimed the bank convinced them to take stock and not cash
| at a point in time when the same bank already had been
| preparing for the inevitable bankruptcy of L&H. They lost
| because M&A was considered a different branch of the bank
| and not supposed to know about the imminent bankruptcy.
|
| BTW: The founders of Dragon Systems are a married couple
| with an interesting bio too.
| lazyjones wrote:
| What a strange situation. WireCard immediately looked dubious
| when I did some research about it last year (as a regular stock
| investor) and I often stumbled over opinions like this one
| https://www.deraktionaer.de/artikel/aktien/markus-krall-luft...
| (German, sorry) where somewhat reputable people said they would
| never consider investing into WireCard, without giving a specific
| reason. The business model of a payment provider is
| straightforward and ought to be hard to get completely wrong,
| "what's there to be afraid of that nobody wants to speak about?",
| I was wondering. In hindsight it's like everybody knew or had a
| gut feeling something was fishy but decided not to talk about it.
| ckastner wrote:
| As I mentioned in another submitted story: SoftBank really knows
| how to pick them. It invested 1 billion about a year ago [1].
|
| [1]
| https://www.bloomberg.com/news/articles/2019-04-23/softbank-....
| samizdis wrote:
| Got a file not found with the link above, but this [1] is a few
| hours ago: "SoftBank Support for Wirecard Under Scrutiny After
| Meltdown"
|
| [1] https://www.msn.com/en-us/finance/companies/softbank-
| support...
| grumple wrote:
| Do we consider a softbank investment to be a red flag at this
| point?
| jansan wrote:
| But not directly. WSJ wrote "Funding came from personal
| accounts of a group of SoftBank employees and an outside
| investor."
|
| Doesn't make it better, does it?
| lazyjones wrote:
| Who knows whether that investment actually happened at this
| point...
| koheripbal wrote:
| It's definitely better for SoftBank.
| hef19898 wrote:
| Which has me a little bit worried about Flexport... SoftBank
| seems to be a good indicator or trouble.
| koheripbal wrote:
| corrected link:
| https://www.bloomberg.com/news/articles/2019-04-23/softbank-...
| fabian2k wrote:
| There are 1.9 billion EUR missing, not sure if the implication is
| that they were stolen or never existed in the first place. I also
| can't really think of any possible explanation for this to go so
| far when the banks in question say that the account never existed
| at all. It doesn't seem believable that anyone seriously
| investigated the potential fraud in the last months or years, and
| the scandal has been public for a while now.
| jansan wrote:
| You cannot believe how sophisticated fraud can be. There was an
| amazing fraud scheme in Germany in the 1990s by a company
| called FlowTex. Their business was selling drilling machines
| for the oil and gas industry.
|
| The amazing part about the fraud was that they sold 3000
| drilling machines, but only about 300 actually existed. You
| would think it should be easy to simply count the existing
| drilling machines, but they changed the serial number plates
| and presented the same machines over and over again to
| investors and auditors. Just unbelievable that this worked for
| a few years.
| mtmail wrote:
| https://en.wikipedia.org/wiki/FlowTex Saw a documentary with
| the founder the other day, served 7 of a 12 year prison
| sentence.
| tibbydudeza wrote:
| Interesting here is a documentary on this
| https://www.youtube.com/watch?v=fQ5m0Gv-xKM
| LatteLazy wrote:
| We really do need some process where by the accounts of large
| companies are reconciled with reality. I understand completely
| that this is not possible for all the numbers investors want to
| see (Profit is made up after all). But there should be a
| requirement to report certain hard numbers (cash revenues and
| cash held for instance) that should be audited and correct to the
| penny on a given day. If a business claims to have received 1m
| $/PS/E in cash sales, they should be able to show their
| accountant credit transactions for that amount and 0.1% of those
| should be checked by calling the customer and confirming they
| paid the money. The same applies for cash on hand on a historic
| day.
|
| Nothing will make fraud impossible, but right now it's just so
| easy...
| eigenvalue wrote:
| They basically do this now (or are supposed to) but only once a
| year for the annual audit. It gets complicated when you have
| related party transactions, where separate private companies
| that are secretly controlled by the CEO can claim that they owe
| money to the main company. Eventually these things get found
| out, like in this case, but by then a lot of investors can lose
| their money.
| withinthreshold wrote:
| Which is exactly the usual audit procedure - a sample of
| account balances and turnover is tested (i.e., confirmed) with
| the counterparty as part of testing.
| 6510 wrote:
| Centralization and scale are amazingly efficient but when things
| go wrong it similarly scales all the way. But hey, at least it
| wasn't 2.3 trillion this time.
| x87678r wrote:
| 2 Billion? Isn't that just a regular burn rate for a fintech
| startup? I'll assume this company just gets some funding then
| continues on its way.
| s_dev wrote:
| Who's gonna fund a company that just exposed itself as having
| fraudulent accounting?
| dang wrote:
| Not much recent HN discussion on this. Some here:
| https://news.ycombinator.com/item?id=23438323.
|
| But this, from a year ago, reads interestingly now:
| https://news.ycombinator.com/item?id=19737344.
| dmix wrote:
| Looks like the fraud was even worse than what last year's FT
| investigation was suggesting.
|
| Originally it was just a few million transferred between
| multiple subsidiaries to fake sales figures to meet quarterly
| projections. Now actually "losing" billions of dollars sounds
| much worse.
|
| I guess where there's smoke there's often fire.
| miohtama wrote:
| Wirecard is issuer of most crypto debit cards
|
| https://cointelegraph-com.cdn.ampproject.org/c/s/cointelegra...
| [deleted]
| pythonwizz wrote:
| Wirecard has been accused before of fraud by so called "short
| sellers". The document published (2 years ago?) showed a
| tremendous, extraordinary complex network of international
| corporations. Such complex setups have a very limited purpose. It
| can basically be only tax "optimization", hide fraud or hide
| ownership (UBO). After having seen this PDF I would not touch the
| Wirecard stock.
|
| By the way, I think Alibaba is opening two new corporations. Per
| day. You may also want to read at Bronte Capital about Alibaba.
| boldslogan wrote:
| Can you remember any keywords to find that pdf or link with the
| multiple company set up about this?
|
| Thanks for the alibaba tip.
| tex0 wrote:
| Can someone please explain to me how 1.9B can go missing? I'm
| probably too naive, but I really don't how that much money can
| get "lost".
| weinzierl wrote:
| Bloomberg article from yesterday[1] phrased it as _" [..]
| auditors couldn't find about 1.9 billion euros ($2.1 billion)
| in cash [..]"_ and _" [..] were unable to find accounts [..]"_
|
| I, too, was wondering what to think. How can I imagine to be
| unable to find an account?
|
| [1]
| https://www.bloomberg.com/news/articles/2020-06-18/wirecard-...
| jansan wrote:
| As I understand it Wirecard had a written confirmation by two
| Phillipine banks that there is 2 biion in desposits. E&Y got
| suspicious, because the confirmations arrived really fast,
| much faster thank banks usually take to issue these papers.
| So they sent a guy in the Phillipines to the banks to
| investigate. The banks claimed that there are no deposits and
| the documents were issues by an employee without
| authorization.
| x87678r wrote:
| Acquiring Chinese companies will do that.
| H8crilA wrote:
| It was never there.
| baxtr wrote:
| It's a shame that this company is part of the DAX, Germany's
| large cap index of its 30 largest companies. I hope they get
| expelled soon
| H8crilA wrote:
| They already are, their participation drives down with the
| market cap :D
|
| On a more serious note - Merkel will have to do some serious
| firing and locking up in prison. At least I hope she does that,
| if not frauds will only multiply.
| everybodyknows wrote:
| As reported by the German press:
|
| https://m.dw.com/en/wirecard-ceo-markus-braun-resigns/a-5387...
| sneeze-slayer wrote:
| NPR's Invisibilia did a really interesting show/podcast on one of
| the biggest short sellers of Wirecard and how he has been
| harassed for the past few years. I highly recommend people listen
| to if if they are interested in this crazy Wirecard tale! It's
| titled "Trust Fall"
|
| https://www.npr.org/transcripts/868001948
| MR4D wrote:
| Chilling! That would scare the heck out of me.
| EricRiese wrote:
| I had an idea for how to deal with that sort of harassment.
| There's no point in the harassment unless the harassee knows
| where it's coming from. But revealing that would allow Wirecard
| to be caught. So you have to play a game of "WHAT'S THAT? I'M
| HARD OF HEARING! YOU'LL HAVE TO SPEAK INTO THIS MICROPHONE!"
| And make public pronouncements that you don't know who's
| harassing you. Could make a good premise for a comedy. Willful
| ignorance.
| 6510 wrote:
| If what people say matters to me depends on who they are and
| what things they've accomplished (relevant to the context)
| Anything that doesn't follow that format just makes me laugh.
| AndrewBissell wrote:
| > There's no point in the harassment unless the harassee
| knows where it's coming from. But revealing that would allow
| Wirecard to be caught.
|
| Not really. If you look at the circumstances around this
| fraud, it's clear that "they are harassing short sellers"
| would have been just one more grain on the pile of evidence
| that was willfully ignored as it was going on, or one more
| legal violation for authorities to look the other way on.
|
| It's not just Wirecard, there are very often media reports of
| short sellers or whistleblowers being targeted for harassment
| by companies while they are engaged in ongoing fraud and it
| rarely makes any difference to broad public perception or
| regulator action.
| TazeTSchnitzel wrote:
| > There's no point in the harassment unless the harassee
| knows where it's coming from.
|
| The harrasser doesn't have to say they're doing it, though.
| The victim probably knows who it's from even if it's
| completely anonymous.
| ByteJockey wrote:
| That's the point of the pronouncements.
|
| If the harasser thinks you haven't put two and two together
| yet, they have two options.
|
| 1. Quit 2. Be more obvious
|
| 1 is what you want, 2 is better evidence in court, win-win.
| ilikehurdles wrote:
| This was one of the groups hired to conduct some of his
| harassment: https://citizenlab.ca/2020/06/dark-basin-
| uncovering-a-massiv...
| sneeze-slayer wrote:
| I wonder who hired them. Sure, it could be the CEO of
| Wirecard, but it could also be another large shareholder.
| Given how ridiculous this story is and how Germany's
| regulator BaFIN has done such a horrendous job looking over
| Wirecard, I would believe it if they were somehow complicit.
| I guess only time will tell, though.
| rando444 wrote:
| Any shortseller with a lot of money would have an interest
| in bringing them down sooner rather than later.
|
| Their financial trickery was exposed in early 2019 and then
| was overwhelmingly confirmed by the end of 2019.
|
| If you were trying to make some money on their stock
| tanking, timing it would have been anywhere from extremely
| difficult to impossible.
| hef19898 wrote:
| The KPMG report was a good moment. As was earlier this
| week when EY refused to attest the 2019 balance sheet.
| Maybe not perfect, but still enough profit potential if
| you ask me.
| jacquesm wrote:
| BaFIN is very much shorthanded, their typical approach is
| to let go until things get out of hand, they simply do not
| have the manpower to do pro-active oversight.
|
| Lots of companies that you would expect to be regulated
| operate entirely on self regulation, and that of course
| doesn't work at all in the longer run. Increasing the BaFIN
| budget and making their salary structure comparable to
| industry salaries would do a lot of good in this respect.
| fluffything wrote:
| This guy literally called them, multiple times, to their
| whistleblower hotline asking "Do you speak english?" "Of
| course, what's up?" "So I've been looking into
| Wirecard..." "Oh sorry, no, we don't speak english" (hang
| up).
|
| That's not being short handed, that's being negligent.
| They knew something was up with Wirecard, and they
| actively tried to ignore all the warnings, and now all
| stakeholders have lost ~80% of the share value.
|
| So yeah, the DAX is a joke and Germany is a banana
| republic.
| prepend wrote:
| " Increasing the BaFIN budget and making their salary
| structure comparable to industry salaries would do a lot
| of good in this respect."
|
| Alternatively, it might just bump up the salary and bonus
| of existing employees while truly smart people avoid it
| due to structural issues.
|
| I am wary of the default line that "Thing that sucks is
| due to poor funding." Sometimes that is true. But I would
| like to see more support for that line of reasoning to
| better understand.
|
| I don't think money is the only motivator and I've worked
| with organizations that claimed that money was the cause
| for poor morale and poor performance. But when I dug into
| it more, even the areas where money was the same as other
| orgs the morale and performance off.
| AndrewBissell wrote:
| It wasn't just short sellers. Journalists at the Financial
| Times were also harassed and threatened, including by the
| German authorities, for their skeptical reporting on Wirecard.
| There were absolutely abysmal performances by German
| regulators, Ernst & Young auditors, and the vast majority of
| the financial media, who ran cover for the fraud long past the
| point where it became pretty obvious.
| hef19898 wrote:
| The fact that Wirecards claims against the FT weren't laughed
| out of court, well at the front door, is just stunning. I
| guess Germany was just happy to have a high profile, highly
| successful FinTech. And that resulted in some reluctance to
| look too closely. Not acceptable, either way.
| empath75 wrote:
| "Never threaten to cost someone more than it would cost to have
| you killed." is a reasonable rule to live by.
| basseq wrote:
| With the important caveats of 1) the _implicit_ costs of
| murder-for-hire are probably pretty high (risk of going to
| jail, e.g.) and 2) killing someone doesn 't necessarily make
| the lawsuit go away--though that doesn't help the person
| being killed.
|
| So the utility formula is something like:
| (p[c] * c[f] + c[a]) / p[l] > c[l] where:
| p[c] = probability of getting caught p[l] = probability
| of the lawsuit being dropped c[f] = value of your
| freedom c[a] = cost of an assassin c[l] = cost of
| losing the lawsuit
|
| You can layer in additional probabilities--like the
| probability of the assassination being successful, or the
| probability of winning the case. This is just fun to talk
| about the utility formula of assassinations on HN.
|
| But it's probably true that as c[l] increases, c[f] increases
| as well, and p[l] drops. So it's rarely (never?) worth this
| trade-off.
| catalogia wrote:
| You forgot _' probability that your opponent reasons
| matters like this out rationally'_, which is a big one I
| think.
| basseq wrote:
| Which, if you want to get pedantic--and yes! let's get
| pedantic!--probably correlates with a lower probability
| that the assassination isn't successful. Because if
| they're irrational, they're going to end up meeting an
| undercover cop in the parking lot of the local K-Mart or
| something.
|
| See also: _Tiger King_. Which is probably the best
| citation and the best thing I 'll type all day.
| fragmede wrote:
| Ah yes, Tiger King, a well balanced documentary that
| presents an in-depth look at the practices of murder for
| hire, and not a lurid tale of entertainment so Netflix
| can make more money. Popular media, especially shows like
| CSI and Law and Order, have an incentive to show the rich
| white folk how resolute the government is, and just how
| much no one could ever get away with murder. The
| reality's a bit different, and as recent events have
| shown, the police aren't above murder anyway. They
| protect their own and accept murderers in their ranks.
| So, an ex-cop or current cop is probably the _best_
| person to properly incentivize to commit murder.
|
| For them, `p[c] = probability of getting caught` expands
| to a[c] = probability of getting caught a[b] =
| probability of there being no repercussions despite
| getting caught.
|
| But if we're gonna base today's lesson on how to get away
| with murder on the show _Tiger King_ , the two step
| lesson it teaches is: 1. own a tiger sanctuary. 2. feed
| your husband to the tigers for lunch.
| catalogia wrote:
| One of them was convicted, and the other wasn't. Sure
| that's not _proof_ of anything, but it 's more than just
| the netflix documentary that says he did it.
| catalogia wrote:
| They might also try to kill you themselves. Honestly I
| think most murderers (or would-be-murderers, or people
| who [try to] hire murders) are probably not thinking
| about their situation rationally. Phrased another way:
| most murders are not rationally motivated. Therefore I
| don't think the 'rational analysis' approach to
| predicting who might try to have you dead is likely to
| work well.
|
| There are exceptions to everything but I think in general
| the more erratically somebody behaves, the more you
| should be concerned.
| fragmede wrote:
| Logical, and I host most of us are able to live a life of
| such privilege. In desperate times, however, there are those
| who are forced to stand up for what they believe is right,
| and not to simply roll over. The fight with my HOA on my
| right to put in a trampoline is not worth killing over, but
| people like President Lincoln, Mahatma Gandhi, Martin Luther
| King Jr., and Alexander Litvinenko have faced problems that
| were.
| dbuder wrote:
| Coward.
| raducu wrote:
| You also have to factor in the feasibility of that someone
| being able to get away with murder, then you must factor in
| how valuable a couple decades in prison is worth to them, and
| how prone they are to taking such risks.
| pstrateman wrote:
| > You also have to factor in the feasibility of that
| someone being able to get away with murder
|
| How would it matter to the person in this example? They're
| already dead...
| gspr wrote:
| That seems like a rule that would have a terrifying chilling
| effect on a lot of legitimate lawsuits.
| raducu wrote:
| Luckily a lot of people live in the civilized world, where
| the high likelihood of being caught and prosecuted for
| murder and spending a lot of time in jail, make murder a
| not so reasonable option -- assuming we are talking about
| psychopaths willing to kill someone for financial gain.
|
| Murder is nowadays an option for few criminal organizations
| -- such as the USA government, the British Royal House
| (remember, Epstein didn't kill himself), the Russian
| Government or the mafia or some drug gangs.
| tbonepickens wrote:
| "remember, Epstein didn't kill himself" - citation needed
|
| I get that Epstein's death was fishy, I myself very much
| think so, but "Epstein didn't kill himself" isn't a
| factual statement because there still lies a possibility
| that he took his own life
| a1369209993 wrote:
| Nitpick: a government technically isn't a criminal
| organization because they define "criminal" to not
| include themselves.
| AtHeartEngineer wrote:
| I disagree, this discounts the martyr
| rv-de wrote:
| So much text and so little actual content ... they should
| provide a TL;DR for people who have stuff to do.
| marricks wrote:
| That was fun to listen to but NPR programming always seems to
| have a grating turn in the middle of "gosh isn't it crazy how
| people in society don't trust anyone any more??? Not
| professionals or the government or even police!" and it's like,
| yep, institutions have continued to epically fail people at
| large, please stop playing clueless NPR.
| AndrewBissell wrote:
| If any story shows the utter untrustworthiness of (the vast
| majority of) the media and government authorities, it's
| Wirecard. This will probably be further reinforced by a
| relative lack of serious consequences for everyone involved.
| crocodiletears wrote:
| At one time, I listened to NPR for hours every week. After
| 2016, something in them seemed to snap, and after listening
| to one of their anchors going after the 538 guy as if he and
| his industry were fully responsible for Trump's election, and
| demanding some sort of apology I resolved to give them a dew
| months to come back to their senses. I still listen to them
| regularly, they regularly put out good journalism. But when I
| came back to them they just sounded absurdly out of touch
| with the rest of the world.
|
| I'm still not entirely sure whether it's because my worlview
| expanded, or because theirs narrowed.
| CathedralBorrow wrote:
| I definitely don't want to dismiss your experience but I
| have a hard time understanding:
|
| "after listening to one of their anchors going after the
| 538 guy as if he and his industry were fully responsible
| for Trump's election, and demanding some sort of apology".
|
| I'm sure Nate Silver wasn't actually blamed for election
| results and I'm sure no one actually demanded an apology.
| Can you smooth the hyporbole a bit and explain what they
| actually said that made you feel that way?
| marricks wrote:
| If all one has is CNN, MSNBC, Fox, and NPR then NPR feels
| like a (somehow calming) ocean of truth. I think starting
| circa 2013 there were a few huge stories which made people
| realize that the "hard-hitting" journalism they were
| reading wasn't all that hard-hitting. Snowden revelations,
| all that money in the cayman islands, then the whole lot of
| nothing being done about either.
|
| Below is a comment I made a year ago on HN about my
| favorite NPR story:
|
| ------
|
| Growing up I though of NPR as a bastion of the left but the
| older I get the more cynical I become. Your take reminds me
| of the most infuriating story I heard on NPR about Amazon
| Seasonal workers.
|
| They spotlighted a retiree couple would supplements their
| income with it in the winter and drives south to gamble in
| the summer and it just sounded like a profile of a charmed
| life, somehow I imagine that isn't the case for most people
| who work there...
|
| They have monthly fundraising drives where they ask
| listeners to pay up for fearless journalism but a lot of it
| sounds like it was written by and for entrenched
| industries.
| https://www.marketplace.org/2017/12/21/business/holiday-
| seas....
| kube-system wrote:
| Meh, I don't think it's necessarily 'hard-hitting' to
| point out that seasonal work doesn't provide a year-round
| paycheck. There's a whole lot of work in this world that
| inherently falls way outside of full-year full-time
| 9-to-5 Mon-to-Fri norms -- and there's not anything
| inherently wrong with that.
|
| I recognize that not everyone has to live in a cookie
| cutter mold of my preferred lifestyle. I personally think
| that an expose of workers who are underemployed better
| belongs in a story about social policy, education,
| culture, or small business than it does in a story about
| Amazon. Amazon is hardly the inventor of seasonal work,
| and they pay considerably above market for an unskilled
| job.
| marricks wrote:
| My point of about hard hitting stories was that NPR
| either doesn't have them or or when they do they remove
| the teeth by virtue of the perspective they choose.
|
| Take this Wirecard NPR story, Matt owns the Shadowfall
| company which itself holds 500 million in assets[1]. His
| situation feels awful, and you should empathize with the
| man, but god after listening to NPR for several years you
| wonder why so many protagonists are millionaires.
|
| Bringing up the Amazon-NPR story was just tying together
| where I think NPR especially fails: I don't think NPR
| lies, or even covers the wrong topics, they just cover
| them with an establishment centered perspective.
|
| Take Amazon seasonal workers: why not cover how Amazon
| extracts huge wealth out of communities and in place
| gives jobs that pay little with littler benefits?
|
| Take Wirecard story: perhaps short selling is an awful
| way to hold companies accountable and what we actually
| need is a SEC company with teeth.
|
| Another favorite of mine which I think pulls it all
| together was during the passing of the Trump Tax Cuts.
| All Things Considered's lead story was that the cuts were
| good and just at the wrong time. I heard this during rush
| hour, so NPR prime time![2] During a time of great change
| in fiscal policy the radio station Trump supporters most
| loathe is out there politely questioning the timing of
| his decisions.
|
| [1] https://www.companysearchesmadesimple.com/company/uk/
| oc41560...
|
| [2] https://www.npr.org/2017/12/04/568392909/is-this-the-
| right-t...
| karmakaze wrote:
| Why is anyone downvoting this--can one not express a
| personal experience? It you disagree, comment.
| [deleted]
| H8crilA wrote:
| A very good thread summarizing what happened in this massive
| fraud:
|
| https://mobile.twitter.com/DonutShorts/status/12736903626080...
|
| Expect more revelations in the coming year or so:
|
| > "Only when the tide goes out you find out who has been swimming
| naked" - Warren Buffet
|
| > "The fraud cycle follows the business cycle" - Jim Chanos
| blablabla123 wrote:
| Since years there have been allegation of fraud towards
| Wirecard. [1] I cannot understand how they even managed to make
| an IPO.
|
| [1]
| https://translate.google.com/translate?sl=auto&tl=en&u=https...
| gizmo wrote:
| They didn't just IPO, they were included in the DAX 30! In
| addition, Wirecard claimed to be vastly more profitable than
| their competitors, but they never actually explained how they
| made all their money. There was certainly enough smoke to
| warrant an investigation, but regulators were asleep at the
| wheel.
| DagAgren wrote:
| Regulators were definitely not asleep at the wheel. They
| were apparently actively defending them, for instance by
| attempting to sue the Financial Times for reporting on the
| irregularities.
| blablabla123 wrote:
| "No one knew how they did it. One theory was that they were
| active in more "risky" areas such as online gambling and
| porn sites but no one cared as long as reported profits and
| the stock price went up."
|
| That's actually the explanation. 10 years ago I ran a small
| project and they were the only Payment Service Provider
| that agreed to work with us. At that time at least in
| Germany there were no Paypal and Stripe to directly process
| Credit Cards etc. for small websites. IIRC their fees -
| especially for refunds - were much higher than those of
| competitors. Refund rates are normally in the sub
| percentage but they would accept higher than usual refund
| rates without cancelling the account. It's easy to start a
| business in an area where there is a vacuum of competitors.
|
| (FWIW I think cancelling the account with them to switch
| over to Paypal took almost 2 years...)
| hef19898 wrote:
| I have trouble to see the risk with processing payments
| for online porn. Sure, some institutions might have a
| "moral" issue, but otherwise? Gambling could be
| different, so.
| objclxt wrote:
| > I have trouble to see the risk with processing payments
| for online porn.
|
| _Huge_ number of chargebacks. A previous employer of
| mine had a subsidiary that handled premium rate SMS and
| phone call billing, a lot of which was adult services.
| You 'd see a huge amount of contested charges, for
| reasons such as:
|
| * Buyer's remorse (get drunk, wake up the next day,
| realise you spent $500 on porn)
|
| * Unsupervised minor - your kid "borrows" your credit
| card for some online "research"
|
| * Outright fraud - stolen cards, etc.
| stickfigure wrote:
| This varies quite a bit. I was the CTO of a very large
| porn site in the mid-2000s and our chargeback rate was
| tiny - a small fraction of a percent. That fact didn't
| help us avoid high-risk categorization, though.
| ojnabieoot wrote:
| PornHub has an enormous problem with sexual trafficking
| and child abuse, which means that financing PornHub
| exposes you to serious legal liability (and an
| unambiguous moral responsibility). So it's not just
| institutional prudishness - online porn is full of
| vicious criminals.
| arbitrary_name wrote:
| Wow so I guess Facebook needs to be classified as high
| risk as well? Please don't spread misinformation like
| that.
| anoncareer0212 wrote:
| No
| chefkoch wrote:
| I guess there are a lot of chargebacks from people
| entering their details for "trials" as well as stolen
| cards being used.
| ksherlock wrote:
| Being asleep at the wheel would be an improvement. Last
| year, BaFin -- the german regulators -- investigated
| Financial Times for market manipulation (ie, reporting on
| Wirecard's suspicious accounting practices).
|
| https://aboutus.ft.com/en-gb/announcements/ft-statement-
| on-w...
| ryneandal wrote:
| Agreed. Ignorance would be more ideal than corruption.
| weego wrote:
| Also last year Deutsche Bank gave the CEO a EUR150 million
| personal loan using his Wirecard stock as collateral.
|
| This isn't a case of a few errors and lack of a little due
| diligence.
| jansan wrote:
| Just for the record, Deutsche Bank is a private company
| with the majority of stocks owned by non-German
| investors. It is not to be confused with the Bundesbank,
| which is something like the German FED.
| mancini0 wrote:
| it's a public company, its shares are tradeable on
| exchanges
| fermigier wrote:
| "Private" and "public" companies don't have the same
| meaning in our side of the Pond. In France, "public" =
| "state-owned" and "private" = "not public".
| hef19898 wrote:
| Oh, wasn't aware of that. Not that I'm surprised that is
| Deutsche Bank. They have a long track record of shady
| dealings reaching back to, as far as I remember, the 90s.
| mschuster91 wrote:
| > Also last year Deutsche Bank gave the CEO a EUR150
| million personal loan using his Wirecard stock as
| collateral.
|
| That kind of stuff is pretty common though, Elon Musk has
| about 15 billion dollars, 100x that amount (!), of his
| Tesla stocks posted as collateral for personal loans:
| https://www.theverge.com/2020/5/8/21252487/elon-musk-
| persona...
|
| And Deutsche Bank is a big player in this kind of
| business, remember their involvement with Trump?
| weego wrote:
| It's common, but the problems at Wirecard have been
| public for a long time and will be even more well known
| in the industry so you would imagine that due diligence
| would have questioned the potential value of his
| collateral against such a loan.
| murph-almighty wrote:
| Honestly why do banks accept this collateral when
| underwriting a loan? Stocks are known to be volatile,
| aren't there more stable assets you should collateralize
| (e.g. inventory, real estate)?
| throwaway98797 wrote:
| Depends on advance rate. Loaning 20% of the value of the
| collateral seems pretty safe on average.
| ashika wrote:
| ft's reporting on this story has been great throughout. I
| would recommend anyone looking to get more background to read
| the solid investigative pieces Olaf Storbeck and Dan McCrum
| have done over the past few years1[1]. they deserve a lot of
| credit for pursuing this likely enron level accounting
| malfeasance story to the top.
|
| [1] https://www.ft.com/content/d080c3fc-c561-11e8-8670-c53533
| 79f...
| StreamBright wrote:
| You can hide a lot of things in an international crime
| organisation.
| NonEUCitizen wrote:
| IPO'd via reverse merger, according to MSN article linked to
| from other post https://news.ycombinator.com/item?id=23573350
| :
|
| "Wirecard's origins date back to 1999, when its Berlin-based
| predecessor InfoGenie was founded. Wirecard listed its shares
| on Frankfurt's stock exchange through a reverse merger with
| InfoGenie in 2005."
| ilamont wrote:
| _When the $WDI scandal is viewed in the context of many German
| banking frauds & the VW stock rigging by Porsche, investors can
| rightly ask whether German financial regulation is anything but
| a fig leaf._
|
| The same could be said for many financial regulators all over
| the world -- clubby relationships with financiers, vulnerable
| to lobbying, "looking the other way" when there are signs of
| problems, letting the big fish off the hook while coming down
| hard on small players, etc.
|
| In some countries it's much worse, with outright fraud
| involving the regulators themselves.
| pulse7 wrote:
| Like Madoff and his financial regulation friends in the US...
| lazyjones wrote:
| But the difference is that the US has harsh punishment and
| a system that learns from its mistakes. In Germany, bad
| actors are usually involved with the highest political
| circles and nothing ever happens. See the "cum ex" scandal,
| which cost the tax payers something like $36b and Germany
| just let it continue for years after taking notice.
| v77 wrote:
| The U.S. is one of the few countries that actually
| prosecutes financial fraud. Here in Canada we've quietly
| become the world's money laundering leader, or at least
| second only to Switzerland and there's essentially zero
| resources dedicated to any kind of enforcement.
| blaser-waffle wrote:
| s/Canada/Vancouver; #or maybe Toronto
|
| Not a lot of money laundering coming through NL or SK
| slivanes wrote:
| North Dakota is now the worlds capital for hiding money.
| [deleted]
| influx wrote:
| North or South Dakota? Have heard a lot about South
| Dakota trusts, but nothing about North.
| apetresc wrote:
| Judging by the variety of answers on this thread alone,
| I'm going to assume that if random internet commenters
| all know that a place is the most secure, secret place to
| do something illegal, it probably isn't really.
| dmix wrote:
| The first rule of tax shelters...
| sk5t wrote:
| When you see Citi 'headquarted' in Sioux Falls you know
| something is up. ND, SD, NV, AZ, UT, FL, TX--one seldom
| gets a warm and fuzzy feeling of reassurance from these
| business addresses.
| ByteJockey wrote:
| Banks it makes sense. SD doesn't have usury laws, and
| multi-state banks can charge interest based on their home
| state's laws.
|
| As to what the other states get you, I'm not sure.
| hodgesrm wrote:
| How is it better (or worse!) than Delaware? Reporting
| requirements for Delaware C Corps are pretty lax from
| what I have seen. I even recall reading somewhere that
| few Americans were ensnared by the Panama Papers scandal
| [1] because they could just register in Delaware.
|
| p.s., Sorry any Delaware residents. You live in a very
| nice state.
|
| [1] https://en.wikipedia.org/wiki/Panama_Papers
| ryneandal wrote:
| Late stage capitalism in a nutshell.
| StreamBright wrote:
| This also shows how inefficient government legislation is
| when the potential risk and impact punishment of being caught
| is low. These companies and all the people (not only few)
| should receive a substantial penalty. I think it is was not
| really sufficient in the VW case. We will see how it is going
| to be with WD.
| denzil_correa wrote:
| The common thread in all of these are post-hoc discoveries of
| irregularities. In many cases, these are carried over many
| years and months without being detected. If one needs to
| address this issue, a near real-time approach would be
| needed. Otherwise, such operations will continue to take
| place.
| boringg wrote:
| Way too expensive to regulate in real time and the sample
| size for regulating is pretty low. What you need to do is
| make the punishment for bad behavior strong enough to
| minimize fraud. I would like to think most actors are good
| actors and we take the bad actors and make an example to
| the rest of the industry what to expect if caught. It will
| always be a cat and mouse game.
| amanaplanacanal wrote:
| If the chance of getting caught is low, I'm not sure
| stronger penalties make that much difference. See the
| drug war for example.
| Nasrudith wrote:
| General criminology finds that the certainty of
| punishment so long as it is non-neglible relative to the
| rewards is what matters more than the magnitude as most
| criminals don't think they will get caught unlike others.
| Retric wrote:
| It's almost impossible to do that in real time. The problem
| is fraudulent activity can often be hidden behind a
| smokescreen of legitimate behavior, and stratigraphic
| investments can look overpriced. Apples acquisition of NeXt
| must have looked all kinds of shady at the time.
| econcon wrote:
| But that's when you make most money. Regulators are salaried
| individual, what's the incentive for them to do their job
| properly?
|
| Think about if a regulator looks the other way, he is seen as
| incompetent - many times you'll not be punished for
| incompetence at work. But this benefits the corporate player
| and he can offer benefits to the regulator like private jet
| (for his family/friend use), maybe access to a resort where
| the regulator's family can stay during vacation or maybe an
| apartment in some posh locality where the regulator's kid can
| study abroad.
|
| People are acting in their self interest.
|
| You've salary and ethics Vs luxuries and loyality from the
| rich man who is unlikely to go bust.
|
| Thing is you can choose to not coperate but that only
| increases the price and the rich man goes for your boss then
| you get in trouble as boss is cooperating with them and he
| may fire you.
|
| I once dated a very rich and powerful lady in Asia and she
| could solve all problems with just 1 phone call - that was
| amazing, she new everyone everywhere it felt.
| jes wrote:
| With respect, I do question whether an auditor overlooking
| financial irregularities is actually acting in their self-
| interest.
| [deleted]
| elliekelly wrote:
| Do you know any regulators?
| econcon wrote:
| Yes I know a few guys in customs who are paid to look
| other way and they use CHA to benefit from such thing (so
| they aren't directly involved by indirectly involved
| through CHA) when caught they blame it on people working
| under them
| edoceo wrote:
| That seems illegal. Who's looking the other way on that?
| elliekelly wrote:
| In most countries customs is a law enforcement agency
| (exercising the government's policing power) not a
| regulatory agency (exercising the government's policy-
| making power).
| thesumofall wrote:
| > Losers con't: E&Y - One word: cash. If your audit can't
| confirm the cash in the bank, you need to find another
| business. Full stop. E&Y is the auditor of record in two other
| major suspected frauds
|
| Not sure I get this. The news reports also seem to claim that
| E&Y rejected to sign the balance sheets. Or was that just after
| everything went haywire?
| this_user wrote:
| EY had been WDI's auditor for well over a decade. They only
| now refused to sign after KPMG wouldn't give the company a
| clean bill of health in April. Obviously, these shady
| practices didn't just start in the last few months, so there
| are clearly things that EY should have flagged much earlier,
| but failed to do so. And for that, they will be on the hook.
| thesumofall wrote:
| Thanks for clarifying. Confusing story if you're just
| starting to get into it
| piker wrote:
| Actually didn't catch much of a summary at all there. Just
| winners and losers?
| istvanp wrote:
| Try this, it's the entire thread in one page:
| https://threadreaderapp.com/thread/1273690362608078848.html
| distances wrote:
| Still doesn't help. It doesn't say at all what actually
| happened, expect for a vague mention of made-up cash.
| thaumasiotes wrote:
| The original link was already the entire thread on one
| page. The problem we're complaining about is that the
| thread very clearly isn't intended to say what happened. No
| effort is made in that direction; there is not even a hint
| that it was a goal. It's about as appropriate of a
| recommendation as an unrelated article in _National
| Geographic_.
| dopamean wrote:
| same. not really a very good thread.
| AndrewBissell wrote:
| It's less a summary of "what happened" (which is already
| quite familiar to most of the shorts and FinTwit types who
| follow DonutShorts), and more of an accounting of who
| dropped the ball and who was on the right side of the
| Wirecard fraud.
| TheOtherHobbes wrote:
| Are there _any_ honest, reputable operators in the financial
| industry?
|
| Between Enron, S&L, Lehman, WorldCom, AIG, Wirecard, Madoff,
| VW, gold price fixing, 1MDB, and all the "lost" BTC stories -
| among so many others - it seems like a question that needs to
| be asked.
| nradov wrote:
| The gold market is too large for anyone to fix the price. Not
| even central banks are capable of doing that. It's a paranoid
| fantasy concocted by incompetent traders looking to blame
| someone else for their losses.
| imglorp wrote:
| Then there's systematic fraud between those players. Two that
| come to mind are the Libor manipulation (in the $ trillions)
| around 2006 and the subprime lending fiasco in 08.
|
| The rats will cooperate if it lets them steal more.
| tomp wrote:
| Well, there's two kinds of people - those that are happy with
| what they earn (saving under a mattress or (maybe) in a
| bank), and those that want to have _more_ unearned profits
| and invest their savings / pensions in the stock markets (or
| other businesses).
|
| You mainly hear about the latter kind, and finance is in
| particular an industry that's targeting them. When people
| want something (profit) out of nothing (little to no work
| carefully picking investments, instead just give your money
| to someone else), there's a lot of people willing to sell
| them "something" that's really "nothing".
| enriquto wrote:
| > Are there any honest, reputable operators in the financial
| industry?
|
| The fact that they choose to label their unproductive
| activities as an "industry" and their scams as "products"
| means that the answer is no.
| qppo wrote:
| I mean not all of those companies you listed are in the
| financial industry. VW didn't even commit financial crimes,
| it was regulatory fraud. I don't know if the 1MDB is in the
| same league either, that's plain government corruption.
|
| I feel like if you're going to ask that question then focus
| on dishonest financiers and not every business that has
| broken the law.
| the-dude wrote:
| You forgot HSBC
| _curious_ wrote:
| +Countrywide, Indymac, and Bear Stearns
| ChrisLomont wrote:
| Given that there's tens of thousands of such companies, and
| you can list a handful of bad ones, I suspect the vast
| majority do reputable and honest business.
| pbhjpbhj wrote:
| Seems more likely that those who run financial services are
| motivated primarily by money, and that all such
| institutions are corrupt to the core because they're always
| prepared to break regulations/laws/ethics of there is
| sufficient monetary gain. All the big name financial
| companies have recent irregularities AFAICT.
| pjc50 wrote:
| There are degrees of this issue; any business handling money
| is going to attract fraud, the question is how well the
| internal controls deal with it and whether management are in
| on it.
|
| At one end is Lehman, which was incredibly over-leveraged and
| only slightly fraudulent (
| https://www.accountancyage.com/2010/12/21/ey-sued-over-
| lehma... ), but set out to be a legit investment bank. AIG is
| in a roughly similar category. There was some fraud:
| https://www.sandiegouniontribune.com/sdut-gen-re-aig-
| trial-0... - but the collapse was due to leverage.
|
| At the other end are Madoff and 1MDB, which were
| intentionally fraudulent from the beginning.
|
| The "lost" BTC stories are just off in outer space; the
| bitcoin ecosystem doesn't acknowledge fraud or accounting
| control as a concept, because that goes against "code is law"
| and transaction irreversability.
| the-dude wrote:
| > the bitcoin ecosystem doesn't acknowledge fraud or
| accounting control as a concept,
|
| Neither do banks. Transferred means transferred. They had
| to be regulated into KYC. I don't recall the reason, wether
| it was fraud or terrorism.
| pjc50 wrote:
| You can get it back with a court order (or less) most of
| the time for domestic transfers. IBAN transfers are more
| of a problem.
|
| (In the UK a lot of bill payment stuff is done by direct
| debit, which has a better "guarantee" agreement on
| getting your money back)
| bildung wrote:
| _> I don 't recall the reason, wether it was fraud or
| terrorism._
|
| Interesting question to procrastinate with :) Apparently
| it was both, it started with measures to prevent money
| laundering by the mafia, with the Federal Deposit
| Insurance Act of 1950[0]. The current regulations are a
| result of 9/11 and came as part of the Patriot Act[1].
|
| [0] = https://authenteq.com/the-evolution-of-kyc-part-2/
|
| [1] = https://en.wikipedia.org/wiki/Know_your_customer#La
| ws_by_cou...
| TheOtherHobbes wrote:
| Real people lost a lot of BTC on Mt Gox, so I'm not sure
| how the BTC stories are in outer space.
|
| Apart from that, the second half of your first sentence is
| exactly the question - is fraud _endemic_ to this industry,
| and actually central to its operation?
|
| The popular perception is that the industry is somehow
| fundamentally honest with a few bad-actor exceptions.
|
| Considering how regularly fraud happens, how damaging it
| is, and how rarely it's flagged by auditors and regulators,
| I think it would be useful to question that view.
|
| Or to invert the polarity - how many significant potential
| frauds have been prevented by auditors and regulators, or
| by paperwork theatre like KYC?
|
| Are there any? If so, how do the numbers compare with the
| number of frauds that blow up into real financial and
| reputational damage?
| hitpointdrew wrote:
| >Real people lost a lot of BTC on Mt Gox, so I'm not sure
| how the BTC stories are in outer space.
|
| That was the fault of Mt. Gox, not bitcoin. Also the
| fault of uneducated users, don't leave your bitcoin
| sitting at an exchange.
| pjc50 wrote:
| ^ This is what I meant by the bitcoin community defining
| fraud as "not fraud, also your fault"
| FireBeyond wrote:
| Right, and Enron, E&Y style frauds were the fault of
| those companies, not fiat money.
|
| But ask a BTC True Believer and they will talk about how
| inherently flawed money is with respect to this because
| of how people act, and yet BTC is not inherently flawed
| despite how people act.
| thu2111 wrote:
| Fraud like this isn't common, is it. I think there's a
| question of scale. There are tens of thousands of banks
| in the world, and hundreds of thousands of financial
| firms in general. Perhaps more. Money goes missing on
| this scale once in a blue moon compared to how much is
| processed.
| jansan wrote:
| Yes, but they are usually considered lame and boring.
| Arnt wrote:
| And aren't in the news for that reason. So most of the news
| is about the exciting people doing exciting things, often
| with other people's money.
|
| I searched for the name of (IIRC) the third biggest Swiss
| bank on HN now. No stories ever, one comment, and that
| comment was basically a list of banks. That bank exists,
| though, it just isn't named when people talk about
| scandals.
| thaumasiotes wrote:
| > A very good thread summarizing what happened in this massive
| fraud:
|
| >
| https://mobile.twitter.com/DonutShorts/status/12736903626080...
|
| Huh? I read the thread. It calls out a bunch of people who were
| involved; it doesn't discuss what happened _at all_.
| [deleted]
| Alex3917 wrote:
| Massive fraud? But an independent auditor just confirmed their
| financial position is 4x better than Tether. /s
| H8crilA wrote:
| Hey, massive does not mean the biggest out there :). I can't
| wait to see how the Tether story ends.
| raducu wrote:
| Tether's story ends only if the owners get too greedy and
| exit scam OR if a large minority of people holding tether
| decide to cash out -- which shouldn't happen since such
| whales benefit from tether and other cryptocurrencies money
| laundering operations.
|
| Also, given that there are days when tether issued 3bln
| dollars to prop bitcoin, I'm sure the owners have made a
| lot of money by manipulating other legitimate
| cryptocurrencies prices.
| eatbitseveryday wrote:
| > > "Only when the tide goes out you find out who has been
| swimming naked" - Warren Buffet
|
| What does this mean?
| aspenmayer wrote:
| The emperor's clothes exist in a super-position of both
| existing and non-existing. When the tide goes out, this
| results in the wave function collapse of the super-positional
| state of the emperor's clothes, thus demonstrating the
| observer effect on textile systems.
|
| Just a joke. It means that you can't tell who lost their
| shirt til all the bubbles are drained from the pool, and
| we're left with ourselves, each other, and our new shared
| reality.
| SideburnsOfDoom wrote:
| It means that it's easier to cheat when times are good. But
| when there's an economic downturn (tide goes out, in the
| metaphor), that's when concealed problems can't be hidden any
| longer.
| chooseaname wrote:
| Assuming naked swimmers wouldn't continue to swim as the tide
| goes out, you would find them laying on the sandy beach with
| their no-nos hanging out.
| hef19898 wrote:
| Unless the swimmers are to comfortable in the water to see
| the tide going out. In which case they are caught with
| their pants down, well without pants to begin with. The
| smart swimmers are drinking cocktails by then, courtesy of
| SoftBank more often than not.
| superhuzza wrote:
| That it's easy to hide or overlook financial problems in a
| good market. Once the market is tougher, those problems come
| to light.
| gizmo wrote:
| Wirecard's massive fraud has been documented for over a decade,
| but the German financial oversight group BAFIN refused to do
| their job and investigate the fraud claims:
| https://valueandopportunity.com/2020/06/19/wirecard-the-germ...
|
| There are some real lessons here about journalism, efficient
| markets, govt oversight, and truth prevailing in the very long
| run.
| arkadiytehgraet wrote:
| I believe the easiest explanation here is that the group was
| heavily invested in the stock under question.
| JumpCrisscross wrote:
| Not only that, the German financial regulatory response was to
| ban short selling of Wirecard's stock.
| mschuster91 wrote:
| That's common though, the SEC did a _lot_ of short selling
| bans in the 2008 financial crisis.
| makomk wrote:
| The German financial regulators also launched a criminal
| investigation into the journalists investigating and
| reporting on the fraud: https://www.ft.com/content/8e1948be-6
| 060-11e9-b285-3acd5d435... Their handling of this was nothing
| short of asounding.
| vkou wrote:
| The handling makes perfect sense if you assume that they
| have been compromised. Compromised in the sense that their
| primary job is optics, not regulation.
| woodpanel wrote:
| In the BaFin's defense:
|
| - The accusations of FT journalist McCrum as well as the
| initial "bombshells" of shady "researchers" (that no one
| ever heard of before or thereafter) weren't really red-
| flags but rather came across as construed (the contents of
| those bombshells are not necessarily tied to the missing
| billions)
|
| - some of the outspoken short sellers have a shady history
| as well
|
| - What else should the BaFin as well as prosecutors do if
| there are witnesses that claim to know about FT, or someone
| connected, offering them future dates of incriminating
| articles to be released? Banning short-selling for a
| limited amount of time was the reasonable thing to do.
|
| - Simultaneously the prosecutors started investigating
| against WDI and the BaFin opened investigations
| weeks/months ago against WDI CEO and its leadership for
| cases of market manipulation (due to their communication in
| recent months), so they aren't exactly biased
|
| OTOH:
|
| - the aforementioned paints BaFin at least as slow to
| respond (I've had contacted them about other ponzi's in the
| past and it often took years (5+) until arrests were made).
|
| What is clear:
|
| - there is a high degree of criminal activity involved
|
| - it can't be a single person pulling this off
|
| - and at least one of them must be in the upper-echelons of
| WDI
|
| Whether or not Braun is that one will make all the
| difference for shareholders.
| hef19898 wrote:
| Usually, when reports are wrong journalist retract them.
| That you get sued over it by government authorities is,
| AFAIK, a first in Germany.
| woodpanel wrote:
| There's a difference between _" getting sued over by
| government authorities"_ and government authorities
| investigating suspicions.
|
| The _" getting sued over"_ part didn't happen. Public
| prosecutors investigated - and didn't filed suit. At
| least for now (I doubt they will).
|
| This misrepresentation of such a small but important
| distinction (sueing vs. investigating) is one that was
| also repeatedly seen in short-sellers tweets in the
| anglo-sphere.
| fluffything wrote:
| One of the short sellers called BaFin's whistleblower
| hotline to report them the proof they had of the fraud.
|
| - "[short seller] Do you speak english?"
|
| * "[BaFin] Sure of course.
|
| - "[short seller] I have proof of Wirecard's fraud..."
|
| * "[BaFin - interrupting] Wirecard? Oh sorry no we don't
| speak english. [hang up]"
|
| And that right there is indeed BaFin's fault. They are at
| best negligent and at worst a malicious entity, that has
| scammed many investors out of a lot of money.
| throwawaygh wrote:
| TBF: I know enough German to answer the phone and give
| some answers to basic questions, but not enough German to
| make on-the-record statements about some important legal
| issue.
|
| I mean, I ultimately agree BaFin is shady as hell here,
| but I can at least imagine a scenario where someone
| thought "wait I thought we were going to talk about
| something routine my language skills are not good enough
| for something this sensitive".
| fluffything wrote:
| > "wait I thought we were going to talk about something
| routine my language skills are not good enough for
| something this sensitive".
|
| On the international whistleblower hotline of the
| financial regulatory agency? At least they could have
| connected them with somebody, or tell them to send an
| email somewhere, but hanging up doesn't sound shady to
| me, it just sounds lazy :P
| woodpanel wrote:
| Interesting, you got a link? In my dealings with BaFin
| they were rather open and capable (but slow to act).
| fluffything wrote:
| https://www.npr.org/transcripts/868001948
| woodpanel wrote:
| thanks. tbf the original quote is:
|
| _" EARL: I phoned the whistleblower line there, and I
| said, do you speak English? Yes. Then as soon as I
| mentioned Wirecard, they then said, oh, actually, I don't
| speak very good English. Could you call back? Or then
| another time, the phone just went dead."_
|
| Which kind of confirms trowawaygh's spitballing.
|
| Anyways, this specific short seller's account sounds more
| like its going to be part of a movie.
| woodpanel wrote:
| What is beyond me:
|
| How the hell do you as a CEO manage to not see missing
| billions and/or not inform shareholders, clients and
| employees about that until the very-last day legally
| possible?!
| gizmo wrote:
| If you're extremely guilty you keep going until the music
| stops.
| mrich wrote:
| They were probably attempting to weasel their way out of
| it by raising extra cash (which they did recently) and
| stuff like that. However at some point their lawyers
| probably told them they will go to jail unless they come
| clean now so they did. What I don't understand is why
| nobody has been put in pretrial custody up to now.
| woodpanel wrote:
| I may be falling victim to Braun's non-existing aura, but
| I wouldn't be surprised if it was one of his buddies
| capitalizing on his trust.
|
| It was repeatedly bemoaned that in the case of WDI, a
| blue chip prime standard stock, worth more than any
| German bank (as of yesterday morning) was managed like a
| Mittelstand family business.
|
| It is really weird that WDI's management board was almost
| completely staffed with former fellow students (or people
| who are affilliated with people he knew) from Austria,
| people who often outside of WDI had no job experience.
|
| In the best case this is just due to unicorn-growth. In
| the worst case, they are all in this together. Probably,
| it is something in between, that they we're unfit for the
| big game and one/some of them took advantage of it.
| samizdis wrote:
| No paywall at: https://archive.is/ysED2
| StreamBright wrote:
| And some people claim that EU is so much better than the
| rest of the world in terms of governments and legislation.
| phkahler wrote:
| Oh my. I thought Germany was a shining star in the EU, but
| not any more.
| usrusr wrote:
| In finance and fintech, many in Germany like to think of
| themselves as a bit of an underdog compared to London,
| New York and so on. This can be a dangerous source of
| moral licencing.
| roywiggins wrote:
| Yeah, just look at Deutsche Bank and the trouble they
| managed to get themselves into.
|
| https://www.theguardian.com/business/2019/apr/17/deutsche
| -ba...
| H8crilA wrote:
| Don't forget the messed up incentives. The only people that did
| their jobs were the short sellers (who have their incentives
| set up correctly). Everyone else involved in this story
| deserves to be fired, bankrupted, or thrown in jail.
| JumpCrisscross wrote:
| > _only people that did their jobs were the short sellers_
|
| And the whistleblower and the journalists.
| TheOtherHobbes wrote:
| It's tempting to wonder if perhaps elements in the German
| political and financial establishments were profiting from
| this, and the CEO will be the fall guy.
|
| It seems extremely organised and well-protected for alleged
| fraud.
|
| Usually fraud relies on personal/corporate reputation. But when
| you have both lawyers and hackers being employed to take down
| critics and investigators, it's reasonable to ask questions
| about regulator collusion and political influence.
| gizmo wrote:
| When fraud is too brazen it becomes difficult to believe the
| accusations because the claims are so outrageous. Especially
| when a company looks respectable and employs many people the
| natural instinct is to dismiss the naysayers and critics.
|
| Short sellers and investigative reporters are natural
| contrarians. There just aren't many people willing to invest
| years into proving that everybody else is wrong, especially
| when the victory -- if you get one at all -- will be pyrrhic.
|
| When you make claims that are outside the overton window of
| the listener they can't hear what you're saying because to
| them you sound unhinged. I think that's what happened here.
| catalogia wrote:
| > _A Pyrrhic victory is a victory that inflicts such a
| devastating toll on the victor that it is tantamount to
| defeat._
|
| I don't think that term applies to short sellers or
| investigative reporters. When they win, they profit. John
| Carreyrou's career and reputation have surely seen a boost
| from his work on Theranos, no?
| saberdancer wrote:
| Yes, I believe the point was more toward BaFin and German
| authorities or investigators.
|
| It's interesting thing to realize, short sellers might be
| good control for the market.
| easytiger wrote:
| Being outside the Anglosphere omits a considerable amount of
| accountability in the west.
| ar0 wrote:
| I call Hanlon's razor: "Never attribute to malice that which
| is adequately explained by stupidity".
|
| The problem was that German politicians were extremely
| desperate for at least one large-scale German "new tech
| business" success story, and Wirecard seemed to be the only
| candidate that on the face of it appeared to fit the bill.
| That blinded them to the obvious and made them see an anglo-
| saxon conspiracy to keep German tech down behind every
| reasonable story about Wirecard.
|
| In my opinion, it shows the dangers when national
| protectionism and picking winners intrudes in the supposedly
| neutral business of regulating critical businesses.
| vkou wrote:
| You should also never attribute to stupidity that which is
| adequately explained by greed.
| lioeters wrote:
| From the Twitter thread by @DonutShorts linked in another
| comment..
|
| > In summary, the $WDI fraud has all the features of today's
| highly evolved art of corporate financial fraud. Its scale,
| duration, and brazenness (faked cash!) highlight just how
| free a hand financial fraudsters enjoy to ply their trade.
|
| > It also exposes just how deep the rot is in the realms of
| regulation, accounting, securities exchanges, and (with
| important exceptions) almost all of the financial and
| business media.
|
| > BaFin - their reputation as a financial regulator lies in
| tatters. The entire leadership of the organization should
| resign immediately. Merkel should launch a sweeping
| investigation.
|
| > Taken as a whole, the 'circling of the wagons' by the
| German regulatory, business and media establishment around a
| long running and obvious fraud casts a large shadow on the
| integrity of the German economy.
|
| > A fraud this big and blatant can only persist for this long
| with the assistance, either active or passive, from a wide
| range of enablers. They all need to be named, shamed and
| suffer the consequences of their complicity for the good of
| the financial markets.
| Semaphor wrote:
| > BaFin - their reputation as a financial regulator lies in
| tatters. The entire leadership of the organization should
| resign immediately. Merkel should launch a sweeping
| investigation.
|
| We have a bunch of oversight organs that don't do much
| overseeing and opt for overlooking instead :/
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