Crispin Odey to sue regulator over Wirecard short-selling ban

The German regulator sought to stem short-selling in the financial payments business at the start of 2019

Odey's shrinking fund takes big bet on UK debt

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Crispin Odey is planning to sue the German financial regulator for more than £16bn of lost profits after it banned short-selling on Wirecard early last year.

Last week, Wirecard went into insolvency after an accounting scandal saw €1.9bn go unaccounted for from its balance sheet. Chief executive Markus Braun was arrested on suspicion of fraud and market manipulation. 

Odey had a €36bn short position against the payments business at the start of last year. But in February 2019, the Federal Financial Supervisory Authority, better known as Bafin, banned short selling in the stock citing its importance to the economy and the threat to market confidence from a drop in its share price.

At the time, Odey bought back half the stock and told Bafin his actions were due to its ban.

Now he has told The Times he is seeking a German law firm to take on the case. “We are looking for a firm of daring young solicitors who want to make their name,” he said. So far he struggling to find firms willing to take on the regulator.

He said Bafin “should have been interested in proper markets and price discovery”.

Despite the short selling ban, he still profited to the tune of about €25bn from the position in Wirecard.

Argonaut Absolute Return manager Barry Norris was also among the investors profiting from Wirecard’s accounting fiasco, while former Jupiter European equities star Alexander Darwall, who held a substantial stake in the company via his European Opportunities Investment Trust, has taken a hit. 

Norris has previously said short selling should be encouraged by regulators in order to crackdown on stock market fraud.

In the midst of the coronavirus market sell-off a number of European regulators introduced temporary short-selling bans although the Financial Conduct Authority decided not to follow suit.

See also: FCA told to avoid appeasing ‘beta jockeys’ with short-selling ban

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