"Black book stock exchange": Bankruptcies & scandals of listed companies 2023

• The trend towards virtual general meetings continues to prevail
• The “StaRUG” law offers great potential for abuse
• Wirecard, Siemens Energy and many others attract negative attention

Although the year 2023 was characterized by a recovery overall in terms of developments on the stock markets, investors also had to cope with a number of bankruptcies and scandals. As every year, the Investor Protection Association (SdK) has summarized the negative highlights in its “Black Book Stock Exchange” 2023.

Trend towards virtual general meetings remains intact

For many shareholders, it has turned out to be negative that the trend towards virtual general meetings will continue to prevail in 2023. This innovation gained momentum, particularly with the emergence of the corona pandemic in 2020, and numerous large companies would have made use of this innovation again in 2023 – to the chagrin of shareholders. The SdK complains about many minor and major technical disruptions, some of which made it impossible for investors to follow the general meetings. Although the right to speak and ask questions has been improved, the procedure still cannot keep up with a face-to-face event. In addition, the virtual meetings lack the opportunity for shareholders to exchange ideas with each other, as the two SdK board members Dr. Marc Liebscher and Daniel Bauer point this out in a YouTube video about the stock market black book. Overall, the position of the board of directors vis-à-vis investors will be strengthened through virtual general meetings, said SdK board member Markus Kienle at the presentation of the black book according to the German Press Agency.

StaRUG law could encourage abuse

Another thorn in the side of the investor protection community is the law on the stabilization and restructuring framework for companies, or StaRUG for short. This law is intended to help struggling companies restructure and get through a crisis better without having to go through insolvency proceedings. This is specifically about companies that are threatened with insolvency but are still solvent, explains the IHK Munich and Upper Bavaria in an online article. The law has been in force since January 1, 2021, but, according to the SdK, has great potential for abuse: “The StaRug provides sensible opportunities to restructure companies, but it can also be misused to force shareholders out of the company in a non-transparent manner and against their will . And we fear that this will increase massively in 2024,” the Tagesschau quoted Liebscher as saying.

This was demonstrated by the takeover of the cable and technology company LEONI by the Austrian investor Stefan Pierer. LEONI had run into difficulties as a result of the Corona crisis and the war in Ukraine and had agreed on a restructuring plan with major investor Pierer that provided for the value of its shareholdings to be completely forfeited, so that LEONI shareholders lost their entire investment in the company. Pierer, on the other hand, received all of LEONI’s newly issued, unlisted shares in return for a capital injection of 150 million euros, making the investor the sole owner. The shareholders were therefore forced out of the company without a resolution at the general meeting. In the video, the SdK board members particularly criticize the lack of transparency in the entire process of LEONI’s restructuring plan as well as the lack of information about which assessments the restructuring was based on.

“Wild West on the bond market”

The Stock Exchange Black Book also points out a topic that the authors have dubbed the “Wild West of the Bond Market”. The point is that the segment of bonds from medium-sized companies has enjoyed great popularity over the last ten years, particularly among risk-averse investors. Since 2010, around 250 medium-sized bonds have been issued with a total volume of almost nine billion euros. However, the failure rate is “well over 20 percent” and is very high. In the SdK’s opinion, the increased demand was “misused for questionable transactions” and “investors suffered billions in damage,” as it says in the YouTube video. Investors cannot rely on protection from the authorities: “In general, we have very little capital market competence among the German authorities. Be it in the courts, be it in the public prosecutor’s office. Whenever we have distortions in the capital market, courts, public prosecutors, etc “The supervisory authorities like BaFin are not up to it,” said CEO Liebscher, according to the Tagesschau.

Wirecard scandal still not resolved

A topic that is also addressed in the stock exchange black book, but which is probably already very familiar to investors, is the former DAX group Wirecard. The Wirecard process has been running for over 13 months now and is concerned with dealing with the scandal of the once highly praised payment service provider. Ex-Wirecard boss Markus Braun, ex-Wirecard manager Oliver Bellenhaus and the financial company’s former chief accountant Stephan von Erffa are accused of suspected commercial gang fraud.

However, there are still numerous uncertainties. As the German Press Agency recently reported, Braun and Bellenhaus would accuse each other of being key participants in the large-scale Wirecard fraud. According to the Tagesschau, Liebscher criticizes “the slow processing”. Progress is simply too slow at all levels; a verdict in the trial against Wirecard executives is not expected until 2027. Wirecard shareholders will have to continue to be patient. The starting signal for the model process should not be given until mid-2024, writes Focus guest author Reinhard Schlieker with reference to the SdK board: “One might think that it was about a kiosk fraud in Hintertupfingen and not about the biggest economic scandal in the Federal Republic,” Liebscher is quoted here. In addition, the SdK board members regret in the YouTube video that the fraud against shareholders was ultimately not part of the criminal proceedings.

Furthermore, the auditing firm EY, which had been auditing Wirecard for years, is facing a lawsuit from 13,000 investors. The lawsuit was filed by the Securities Holdings Protection Association (DSW). According to the DSW, it has a volume of 700 million euros, according to the Tagesschau.

Siemens Energy is giving investors headaches

The stock market black book also includes a few other companies that have caused quite a headache for shareholders in 2023. For example, the DAX company Siemens Energy, whose share price fell by around a third twice in just one day in 2023. In 2022, the wind power specialist suffered massively from quality problems with onshore wind turbines, higher costs and problems at the wind power subsidiary Siemens Gamesa and slipped deep into the red. The SdK does not want to speculate about what will happen next for the wind company: “Whether there is hope at Siemens Energy, unfortunately only the board of Siemens Energy can answer that at the moment, because only they – we hope – have insight into what what’s going wrong with her daughter Gamesa,” Liebscher argues to the Tagesschau.

Also in the Black Book

Other companies that appear negatively in the stock market black book are Credit Suisse, which could only be saved through an emergency merger with UBS and whose shareholders were fobbed off with a share value of just 76 cents per share, and the insolvent communications technology provider Gigaset, for which insolvency proceedings were only opened in January 2024, the insolvent provider of charging technology for electric cars Compleo Charging Solutions, whose operational business was taken over by the KOSTAL Group, and the negative development of the private equity investor AURELIUS, which is due to a lack of transparency, a planned delisting and the scandal occurred during the general meeting in September 2023.

“Overall, a mixed year in 2023. We can be happy when this is over. 2024 will definitely be better,” summarizes Liebscher at the end of the YouTube video.

Editorial team finanzen.net

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