Three key lessons investors can learn from the Wirecard disaster

Wirecard, a German payments processing firm, is embroiled in an accounting scandal. Billions of euros have vanished and the share price has collapsed. John Stepek explains what’s happened, and outlines the three key things you need to learn.

Markus Braun, former CEO of Wirecard © Michaela Handrek-Rehle/Bloomberg via Getty Images
Markus Braun, Wirecard's ex-CEO, has been arrested © Getty
(Image credit: Markus Braun, former CEO of Wirecard © Michaela Handrek-Rehle/Bloomberg via Getty Images)

One of an investor’s worst nightmares is to find that a company you’ve invested in is involved in some sort of accounting scandal. It’s a disaster for the share price, obviously. Worse still, it pulls the rug out from under you.

Whatever your rationale for owning the stock, the idea that its numbers might be flawed or even fictitious, means you have no way of judging just how bad the situation is. How can you minimise the odds of this happening to you?

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.