(Bloomberg) -- German financial regulator BaFin temporarily banned new short sales of Wirecard AG shares, saying the price’s recent volatility risks undermining the broader stock market.
BaFin’s ban on new short sales or increases in existing short positions takes effect immediately and will run through April 18, the watchdog said. There is an exception for market-making activities, BaFin said.
Wirecard shares have whipsawed over the last month after a series of reports in the Financial Times alleging fraud at the payment company’s Singapore unit. Wirecard has denied wrongdoing. At the same time, investors have increased their bets that the stock will fall.
The developments on the stock market pose “a serious threat to market trust in Germany,” BaFin said in an order published on its website on Monday. The regulator has said it is investigating whether trading in Wirecard shares has been manipulated.
A Wirecard spokeswoman didn’t immediately return an email seeking comment on BaFin’s statement.
BaFin’s actions come after a report by German newspaper Frankfurter Allgemeine Zeitung last week, saying that Munich prosecutors have information indicating a short seller had prior knowledge of when the FT planned to publish news about the payments provider in its online edition.
A spokeswoman for the FT said that the short seller mentioned in Thursday’s FAZ article “will not have been informed by any FT journalist or staff.” The FAZ didn’t identify the source of its information.
Read about Wirecard’s response to reports of accounting misdeeds.
Short sellers borrow a stock and then sell it in anticipation that it will fall and they can buy back the shares at a lower price to pocket the profit.
Wirecard got its start two decades ago processing payments for gambling and pornography websites. It has since morphed into a developer of software and systems for online payments and fraud protection used across the Internet.
Investors have seen the company as a leader in financial technology, and its revenue almost doubled in the two years to 2018, following acquisitions of at least 18 companies in recent years. In September, Wirecard replaced Commerzbank AG in Germany’s 30-company DAX stock index alongside titans such as Volkswagen AG, Siemens AG and Deutsche Bank AG.
(Updates with time period in second paragraph, Wirecard’s expansion in last.)
--With assistance from Steven Arons.
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