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Wirecard – The “German Enron”, and a personal history

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Re: Wirecard – The “German Enron”, and a personal history

#31

Post by dr_faustus »

newsclues wrote: post #28
chewz wrote: post #2

> Lessons to be learned * even a pretty obvious fraud can go on much longer than one would think if the organizers are ruthless enough. My original short position would have gone against me 25x over 12 years and the share price even after today’s disaster would be higher than back in 2008 (just to be clear: the company is worth ZERO in my opinion) * a company that goes against people who write negative articles as ag…

How many times will we need to learn that the audits and auditors are not always doing a good job?

substitute "not always" with "almost never".

Edit: The problem is that companies get to pick their auditors. Since the auditors sell a homogenous product (it doesnt really matter, who signs off you yearly report), the only way the big four accounting firms can compete is by being cheaper and/or more "favourable" to the customer. Both not that great for the customer (which actually should be the shareholders and in reality its mostly the board).

Re: Wirecard – The “German Enron”, and a personal history

#32

Post by zpeti »

allendoerfer wrote: post #26

I personally know people, who invested considerable amounts of money into Wirecard after the COVID-19 crash and even one, who invested last week on the day the stock took its first dip. At the first point in time the shortselling, the FT articles and the ongoing BAFIN investigation were known. At the second point in time it was known, that they hired there buddies from KPMG, who could not find anything wrong, but eve…

Unfortunately the same reasoning could be applied to Hertz selling stock in a bankrupt company, which would have been impossible 5-10 years ago, but maybe even a few months ago.

I think the markets have been completely messed up by stimulus since 2008, and it's only getting worse. Governments are buying company bonds for gods sake. Stocks aren't about market pricing any more. They are some vanity metric that governments are obsessed about now to keep from falling (just like house prices).

Re: Wirecard – The “German Enron”, and a personal history

#33

Post by allendoerfer »

dr_faustus wrote: post #29
allendoerfer wrote: post #26

I personally know people, who invested considerable amounts of money into Wirecard after the COVID-19 crash and even one, who invested last week on the day the stock took its first dip. At the first point in time the shortselling, the FT articles and the ongoing BAFIN investigation were known. At the second point in time it was known, that they hired there buddies from KPMG, who could not find anything wrong, but eve…

The motivation of your friends to put many in Wirecard stock probably less about investment and more about gamblng. I guess, they didnt invest their life's savings but just some money the had not better use for right now. In these times of zero risk free returns (and even low returns on junk bonds), investing in distressed assets can be a good strategy if you have the stomach to lose it all.

Probably true. But to me that's still disgusting. I belong to a social class, which can put an amount of money you could use to feed a family in the first world for an entire year into a company that's probably a pyramid scheme without even blinking an eye. Just makes you think, what kind of stuff people above us could do.

Re: Wirecard – The “German Enron”, and a personal history

#34

Post by paganel »

yellowstuff wrote: post #17
chewz wrote: post #2

> Lessons to be learned * even a pretty obvious fraud can go on much longer than one would think if the organizers are ruthless enough. My original short position would have gone against me 25x over 12 years and the share price even after today’s disaster would be higher than back in 2008 (just to be clear: the company is worth ZERO in my opinion) * a company that goes against people who write negative articles as ag…

Enron is one example of how these things can turn out, but Herbalife (HLF) is another. HLF is a multi-level marketing company; they're a shady company in an inherently shady business; they have far-flung operations; they aggressively went after people expressing negative information; they had questionable accounting; and there were eventually regulatory rulings against them. But they also are a profitable business th…

I'm no Bill Ackman but I still do think that Herbalife is a fraud.

It's basically just a better marketed MLM company, I first realised about the MLM part 12 or 13 years ago when I went to one of their presentations in my city (got out as soon as I could), which I guess leaves them with the "better marketing" part, which I admit they're pretty good at (if I'm not mistaken at some point they were sponsoring the football team AC Milan and the football player David Beckham).

Re: Wirecard – The “German Enron”, and a personal history

#35

Post by 9nGQluzmnq3M »

lordnacho wrote: post #8
C1sc0cat wrote: post #5

Earlier quoted context omitted.

How do you avoid getting audited for several years ?

I'm no expert, but I think what happens is you shop around for an auditor but you somehow can never find one who will sign off on the audit, because they need you to produce some docs that you don't have.

s/don't have/don't want to give/

Re: Wirecard – The “German Enron”, and a personal history

#36

Post by erfgh »

allendoerfer wrote: post #26

I personally know people, who invested considerable amounts of money into Wirecard after the COVID-19 crash and even one, who invested last week on the day the stock took its first dip. At the first point in time the shortselling, the FT articles and the ongoing BAFIN investigation were known. At the second point in time it was known, that they hired there buddies from KPMG, who could not find anything wrong, but eve…

You're inferring way too much from a couple of failed investments.

Re: Wirecard – The “German Enron”, and a personal history

#37

Post by 9nGQluzmnq3M »

bradleyjg wrote: post #14
luckylion wrote: post #9

> In 2019, the boss of the supervisory board hired KPMG mainly to independently confirm that everything is splendid at Wirecard (E&Y is the auditor of Wirecard). So, will anything happen to E&Y, or do they just get to say "we didn't know that was fraudulent, we just did what we got paid to do"?

Arthur Andersen went out of business after Enron and the big five became the big four. Maybe that was a good outcome in terms of accountability but there needs to be some effective process for promoting new members if we are going to keep culling this club.

They didn't go entirely out of business: their consulting arm is now known as Accenture.

Re: Wirecard – The “German Enron”, and a personal history

#38

Post by tarsinge »

haakonhr wrote: post #15

Crazy story and a good example on that the market can stay irrational/be wrong longer than you can stay liquid.

And that the market nowadays has nearly 0 predicting power and live in the very short term/present, contrary to the priced in belief.

Re: Wirecard – The “German Enron”, and a personal history

#39

Post by allendoerfer »

erfgh wrote: post #36
allendoerfer wrote: post #26

I personally know people, who invested considerable amounts of money into Wirecard after the COVID-19 crash and even one, who invested last week on the day the stock took its first dip. At the first point in time the shortselling, the FT articles and the ongoing BAFIN investigation were known. At the second point in time it was known, that they hired there buddies from KPMG, who could not find anything wrong, but eve…

You're inferring way too much from a couple of failed investments.

Wirecard was the biggest bank of the 4th biggest economy. So I inferred some systemic issues here.

Re: Wirecard – The “German Enron”, and a personal history

#40

Post by kevindkeogh »

9nGQluzmnq3M wrote: post #37
bradleyjg wrote: post #14

Earlier quoted context omitted.

Arthur Andersen went out of business after Enron and the big five became the big four. Maybe that was a good outcome in terms of accountability but there needs to be some effective process for promoting new members if we are going to keep culling this club.

They didn't go entirely out of business: their consulting arm is now known as Accenture.

The split happened prior to the Enron bankruptcy and was the result of a decade of litigation (Andersen consulting partners weren't happy with the profit-splitting with the audit partners).
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