Grenke: Investor raises serious allegations against German financial company

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Grenke: Investor raises serious allegations against German financial company

Investor raises serious allegations against German financial company

September 15, 2020, 6:49 pm | rtr

Grenke headquarters in Baden-Baden (symbol picture): There are serious allegations against the company. (Source: Uli Deck / dpa)

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After the scandal surrounding the insolvent Wirecard Group, another company is now facing serious accusations: An investor accuses the Grenke company of inflating its balance sheets.

The British short seller Fraser Perring has made serious allegations against the leasing company Grenke in a 64-page report. The shares of the company listed in the MDax small cap index fell on Tuesday by almost 30 percent to their lowest level in five years.

Perring had already caused a hustle and bustle on the German stock market in 2016 when he accused the payment processor Wirecard, which has since collapsed, falsified accounts and at the same time bet on falling prices by means of short sales.

Short sales
In this type of trading, one investor borrows shares from another investor. She sells these borrowed shares immediately and then hopes that the price will fall by the redemption date. If that happens, she buys the shares back on the market shortly before they are returned for less money than she made when she sold them and gives them back to the second investor. She reaps the difference from this deal as a profit. On the other hand, if the stock value increases contrary to your bet, it will make losses.

Investor accuses group of having inflated balance sheets

At Grenke, too, Perring is now betting on a price fall with borrowed shares. He himself stated that in the published document that his company "Viceroy Research" wrote.

Specifically, Viceroy Research accuses the provider of leasing and other financial services to have inflated the balance sheet and to have reported too high profits and cash on hand. Grenke bought overpriced companies from affiliated companies. The group sets too high values ​​on the balance sheet for acquired companies and thus keeps profits artificially high.

Financial regulator investigates case

That is why the financial supervisory authority BaFin is taking a closer look at the processes at the leasing company Grenke. The agency said on Tuesday that it was examining the allegations made against Grenke for market abuse in a report by investor Fraser Perring.

Specifically, she analyzes possible market manipulation by Grenke, for example through incorrect information on accounting issues. In addition, she is investigating whether there has been any possible manipulation by third parties in the form of a short sale attack. In addition, suspected insider trading will be checked before the publication of the report by Perring company Viceroy Research. The authority has not yet received any letters or emails from Perring.

  • Reports on balance sheet falsification:Wirecard scandal – investigations against journalists suspended
  • "Substantial criminal energy":Suspected insider trading – employee exempted
  • Victim tells:” The Wirecard shares were my pension plan ”

Grenke announced a written statement. Compared to the "mirror" the company from Baden-Baden rejected the allegations.

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