20200701 Wirecard : the FCA’s freezing of assets.

There was logic to the suspension: in one of the many LinkedIn threads on this topic, someone else has been discussing the core reason albeit in generic terms.

When the parent entered insolvency proceedings, the primary concern was whether customers’ money was ring-fenced against creditors.

Secondly, there was concern that the money should be in the UK and only in the UK.

Remember, for context, that in various jurisdictions, there were investigations as to a “missing” USD1,900 million.

Then questions arose as to whether that money even existed.

Wirecard’s primary regulator BaFin was out to lunch, its auditors, Ernst and Young were – we’ll wait and see exactly why they were so utterly clueless but my expectation is that they will say, as the Big Four habitually say in the face of major failure, something like “we rely on what the senior executives tell us.”

Once Wirecard was on the cusp of a flush, the obvious questions arose: if that money was missing, whose money was it? It’s logical to at least question whether it was money that should have been protected as customers’ funds.

There is precedent – albeit slightly oblique precedent – for freezing the assets of, in that case, a bank.