Deutsche Boers has proposed a new rule to expel companies from its leading stock index DAX if they file for insolvency, Reuters reported on Friday.
This came following the Wildcard scandal involving almost a couple of billions of euros that rocked the German stock market and raised questions on the process of regulatory scrutiny.
Following a few days of the auditor’s revelation of Wildcard’s missing €1.9 billion, the company filed for insolvency.
The proposal is seeking to oust the companies only two days after such filings. The German stock exchange is currently seeking feedback from market participants about the rules change proposal by August 7 and is scheduled to announce its decision by August 13.
If the proposed rule is passed, it will Wildcardldcard from the top stock index in August, a month ahead of the regulator’s review of the index makeup.
Wildcard scandal opens up regulator lapses
Before the scandal, the fintech was touted as onehigh flyingghflying German company. It also displaced Commerzbank to become DAX index’s one of 30 leading companies in 2018.
Marcus Braun who led the company to its apex resigned from his position and was arrested by the German law enforcement under the acquisition of manipulating the accounts of the fintech to make it look good to the investors and also clients. Many other top executives of the company were also ousted and arrested by the prosecutors.
Apart from Germany, the company is also facing probes in international jurisdictions including Singapore and the Philippines.
Notably, Wildcard shares were trading above €100 before the new of the missing cash was made public, but now the stocks are trading at €1.97 apiece, as of press time.
The German market regulator is also suspecting the possibility of insider trading of the fintech’s share ahead of its drop.