Wirecard CEO Braun Resigns Amid Balance Sheet Scandal

German fintech company Wirecard says it doesn't know what happened to €1.9 billion of cash.
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Wirecard  (WCAGY) - Get Report shares fell for the second straight day Friday after CEO Markus Braun resigned, a day after the German payment processing company said it didn't know what became of €1.9 billion ($2.1 billion) of cash that sits on its balance sheet.

The company said in a brief statement that Braun’s resignation represented a mutual agreement with the company and is effective immediately. 

Wirecard also suspended Chief Operating Officer Jan Marsalek.

James Freis, a former chief compliance officer of Deutsche Borse, was named interim CEO after joining the company’s board just Thursday night.

Wirecard was a high-flyer in Germany. In 2018, its market value surpassed that of the country’s largest bank, Deutsche Bank.

Many analysts and investors have been skeptical for some time about the company. It has been one of the most shorted stocks in Europe.

Some critics have accused Wirecard of deploying third parties and shell companies to produce fake revenue and cash that it claimed to possess, but actually didn’t, The Wall Street Journal reported.

As for the €1.9 billion, evidence indicates that Wirecard tried to trick its auditor Ernst & Young into thinking the cash existed, according to the Journal.

Banks can terminate €2 billion worth of loans if Wirecard can’t produce certified annual statements by Friday.

Wirecard said it was “in constructive discussions with its lending banks with regard to the continuation of the credit lines and the further business relationship."

The company’s stock recently traded at €29.45, down 24%. Its U.S.-listed shares cratered 66% Thursday and have plunged 56% over the last three months.