The European Securities and Markets Authority (ESMA) is assessing the supervisory response in the financial reporting area by BaFin and the Financial Reporting Enforcement Panel (FREP) to the events leading to the collapse of Wirecard AG. It will be completed by 30 October 2020.
The assessment will focus on the application of the Guidelines on the Enforcement of Financial Information (GLEFI) by BaFin and FREP, the designated competent authorities for the supervision and enforcement of financial information in the Federal Republic of Germany under the Transparency Directive (TD).
The “fast-track” assessment will be conducted using GLEFI and ESMA’s Peer Review Methodology, within a compressed timeframe. The peer review tool has been chosen as the TD only contains high-level principles regarding financial reporting and its supervision, and the IAS Regulation is not included in the list of acts for which ESMA may launch a Breach of Union Law investigation.
In a 2017 review of BaFin and FREP, areas for improvement included: the procedures in place in both; the selection and examination of issuers; independence and conflict of interests in FREP; and cooperation between the two authorities. ESMA also invited BaFin and the European Commission, in the country-specific onsite report, to investigate whether the TD is correctly transposed by Germany, given BaFin’s self-declared inability to comply with the GLEFI due to a lack of enforcement powers.