Recourse against third parties 

Since the collapse of payment service provider Wirecard AG and its affiliates in summer 2020, investors have been looking into how to compensate their losses by claiming damage from third parties. Such third parties include investment brokers or advisers involved in the distribution of Wirecard AG shares, the auditors of Wirecard’s financial accounts and statements¹ and also the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, “BaFin”). BaFin was responsible for the supervision of Wirecard Bank AG, but since Wirecard AG was a tech company that owned Wirecard Bank AG, BaFin did not supervise Wirecard AG because it was not classified as a financial holding. In its recent decision dated February 10, 2023², the Court of Appeals in Frankfurt (Oberlandesgericht Frankfurt, “OLG Frankfurt”) addressed the question to what extent BaFin can be liable for damages suffered by investors in connection with Wirecard’s bankruptcy. While the detailed reasoning of the decision is not yet available, the following summary has been prepared on the basis of an official press release published by the OLG Frankfurt.

The recent court decision

Confirming a previous decision of the District Court of Frankfurt (“Landgericht Frankfurt”)³, the OLG Frankfurt held that no such liability is present in the Wirecard case. In particular, the court confirmed that BaFin is generally not liable to private investors, as it exercises its duties exclusively to pursue public interests, not private ones.

Lines of arguments by the court

In the case decided, the plaintiff purchased shares issued by Wirecard AG in 2019 and 2020. The plaintiff sued BaFin for alleged failure to adequately supervise Wirecard AG and abuse of office. Based on the accusations, the plaintiff claimed compensation for the loss of investment. By way of background, under German law, private individuals can claim compensation from public entities for losses that they suffered as a consequence of a breach of duty by the public entity. However, this only applies if the relevant duty exists to protect private individuals, as opposed to the public in general. Some legal commentators and investor protection organizations argue that the purpose of BaFin’s duty to supervise issuers of securities is the protection of each individual investor. This would imply, for example, that each investor could claim damage from BaFin if the authority should have realized that financial statements or prospectuses of an issuer of securities were incorrect or misleading. But the statute by which BaFin was constituted sets out that BaFin discharges its duties only in the interest of the public.⁴ Courts and legal commentators have therefore argued that an investor cannot claim damages from BaFin. The OLG Frankfurt has confirmed this view. 

In addition, the OLG Frankfurt held that BaFin did not violate its duties. Rather, the court was of the view that, in line with the legal requirements at the time, Wirecard’s balance sheet was audited in two steps: a balance-sheet audit conducted by a private body and a second audit by BaFin. As BaFin initiated a special audit by a private audit body in February 2019, the court concluded that BaFin had sufficiently complied with its supervisory duty. 

The court further held that the plaintiff did not present sufficient evidence to establish that BaFin should have conducted special audits at an earlier point in time. Moreover, the court held that the plaintiff did not present evidence that the damage could have been avoided if BaFin had intervened earlier.

Finally, the court denied claims for damages that the plaintiff aimed to base on misconduct by BaFin’s employees. In particular, the fact that some of BaFin’s employees held shares in Wirecard was, as such, not considered to be unlawful.

Summary and outlook

The fact that BaFin acted exclusively in the public interest when carrying out its balance sheet audit is, in the opinion of the court, the main argument against a claim for breach of supervisory duties. In principle, individual investors are not protected by BaFin’s supervisory activities. The BaFin exercises its supervisory powers only in the interest of the financial markets. 

However, it should be noted that the decision is not yet final. An appeal to the Federal Court of Justice (Bundesgerichtshof) may be filed to settle the issue of potential recourse against BaFin. 

1. Oberlandesgericht München, Letter of Advice dated 09.12.2021 – 8 U 6063/21↩
2. Oberlandesgericht Frankfurt am Main, Decision dated 06.02.2023, Az. 1 U 173/22; complete reasons for judgment are not yet published. ↩
3. Landgericht Frankfurt am Main, Decision dated 19.01.2022, Az. 2-04 O 65/21↩
4. Section 4 para. 4 of the Law on the Federal Financial Supervisory Authority (Gesetz über die Bundesanstalt für Finanzdienstleistungsaufsicht, “FinDAG”).↩