GERMANS CONSUMED by tech envy of America allowed themselves a flush of pride when Wirecard won a place in the dax index in 2018, and its stockmarket value surged above €24bn ($28bn). Here, it seemed, was a European fintech champion: a digital-payments firm headed for global glory. Today, faces are red again-with embarrassment. Wirecard has admitted it has a €1.9bn hole in its accounts. Its founder and boss, Markus Braun, once lauded as a visionary, quit on June 19th and was arrested and bailed this week on suspicion of false accounting and market manipulation. The firm has begun insolvency proceedings. Wirecard's rise and fall is a case study in the carnage possible when a firm's accounting goes awry but national regulators and big investors are so seduced by the company's narrative that they cannot, or will not, see it. It is also a reminder of how markets stand to benefit from short-sellers-who try to make money betting against listed firms, by selling borrowed shares and buying them back later at a lower price. Had the warnings from Cassan-dras who detected a bad smell around Wirecard years ago been heeded, billions of dollars of losses, many of them borne by pension-fund investors, could have been avoided.
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