German Prosecutor Probing FT Journalist Over Wirecard

Wirecard AG an independent provider of outsourcing and white label solutions for electronic payment transactions is seen in Aschheim

Wirecard AG an independent provider of outsourcing and white label solutions for electronic payment transactions is seen in Aschheim

German authorities have opened an investigation into a Financial Times journalist over reports about German payments firm Wirecard, Frankfurter Allgemeine Zeitung said.

German and European financial market regulators banned short-selling shares of German payment services company Wirecard on Monday following weeks of turbulence in its share price.

The European financial watchdog ESMA agreed with the emergency short-selling ban and said it was necessary to address a "serious threat" to market confidence in Germany.

Data from IHS Markit show that at the end of last week, 12.8 percent of Wirecard shares were out on loan, which IHS Markit said was a proxy for short positions. The probe was triggered by a criminal complaint submitted by an unnamed individual, prosecutors said.

Investors reacted positively to the German financial authority's decision. The FT denied sharing plans about its reporting and said any claims that its staff are involved in market manipulation in relation to Wirecard are "baseless and false", a spokeswoman said in a statement. Short interest is now at about 14 percent, the highest level since mid-2017, according to data from IHS Markit.

Not everyone is convinced by BaFin's rationale for the short-selling ban.

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"In the current situation, there is a risk that this uncertainty will increase and escalate into general market uncertainty", it said. Short sellers started targeting the stock in earnest after a newspaper report of fraud at the company.

About 15.9 million Wirecard shares were out on loan - a proxy for short interest - as of February 14, representing about 14 percent of the company's free float, according to data compiled by IHS Markit Ltd.

Short-sellers borrow shares, sell them on the market and later buy them back. The company has been targeted in the past as well by bears, leading to prosecutions of short sellers.

Wirecard got its start two decades ago processing payments for gambling and pornography websites.

-With assistance from Steven Arons, Katharina Rosskopf, Jan-Patrick Barnert, Stefan Nicola, Ksenia Galouchko, Sree Vidya Bhaktavatsalam and Justina Lee.

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