I found this great piece here. Googled it. So I repost it in full.
Kids study in Eton or US elite schools. Get punished with sticks and adhere to highest moral and discipline standards (aha). They are kids of global elite, half of which are billionaires and generals. Eventually they finish schools and go to Harvard, Oxford and Ivy League. It's been so for ages.
When they finish the education they start their first jobs in investment banks - BlackRock, Founders Fund, JP Morgan, you name it, who cares. Running billions of investments. Or trillions.
Now one of them gets a call from daddy who says "Son, my friend, you know whom I refer to (that may be the boss of CIA or Mi-6 or any other informed person), told me that its worth looking into buying some Adyen shares" which is a good advice as Adyen as a payment company grows super fast in Europe taking all corporate transactions from all Silicon Valley firms like Facebook or Google Europe. So that son says "thank you Dad" and makes a few billions of USD shares purchase in his mutual fund. Invests money of ordinary people, who keep their pensions there. Than he sips coffee and buys other shares like that, as thats exactly what he learned in his elite education program.
Other shares are Wirecard.
Than that kid goes to have a beer (hopefully) to the most elite club his country has and tells this to all of his elite friends. And guess what, they all do the same. With the same billions of USD of ordinary people.
So what happens is that when Adyen shares go sky rocketing, so do Wirecard's. It ends up in a nearly comical situation that Wirecard's capitalization goes over 24b Euros, more than one of oldest German banks - Kommerzbank. Except that Kommerzbank has a trillion of assets and Wirecard in theory (lol) has a few billions on accounts.
But Wirecard is not Adyen. Well mathematically they are equal. But in reality they are different. Wirecard's profit comes all from porn, gambling, forex and other shady crap biz. Mind you - that biz is not really illegal. It has a different issue - today its legal, the other day its illegal in one country, but legal in another and the day after it's again legal back home but with certain limitations - the process of states regulations on gambling, porn and other shady stuff is endless, people been regulating that stuff since days of Moses, people in Stone Age must have had regulations what kind of porn is legal to draw upon stones. And burned those who violated regulations.
That problem is a serious issue just in one case - if the company goes public. Since the stock exchange listed companies are valued under conditions that their cash flow is predictable, NASDAQ multiplier is what 35? That means 35 years of predictable cashflow. Well Adyen has indeed 35 years ahead of predictable cashflow. What's gonna happen in 35 years with Facebook or Google? Most likely Facebook will update their web-design a bit a few times, might even change solid blue color to less blue (that by the way will make millions of profit to quite a few households) and very possibly this author will get the damn blue tick finally, albeit its an open question what to expect earlier - blue tick or the FSB medal of honor, both are missing. Nothing else gonna change for Facebook in coming years. Now Wirecard is an entirely different story. For the reason explained above - today they get 1billion annual profit, the next year - some new man comes in power in Russia, Slovakia or some CrazyNutStan and legislation changes again for betting companies, that means that the legislation actually does not change, but some other people are legally entitled to rob common folk with betting, however while it happens the volume goes down to half.
Actually come to think of that , that is exactly what already happened to Wirecard. Why do you think someone making hundreds of millions of EUR per annum should bother to draw up non-existing cash on accounts? There is a limit how much cocaine can Marsalek's nose take. Nobody can burn so much cash. The reason is very simple - most likely some regulations in some CrazyNunStan changed, and one of annual profits went down as hell. For a non-listed company it would be not an issue, since all regulations always get back to normal (i.e. allowing someone to rob common folk with betting, forex etc) eventually. But for a listed company that's a whole damn issue - your profit goes down and your public stock story is over.
When that happens and if it goes public, what happens to investments done by those white collar kids? They get burned along with the pension funds of common folk. So do kids careers. That makes their parents very very angry, I totally understand them.
Who is to blame?
Visa and MasterCard? Who are you to blame Visa and MasterCard? Pray that Visa and MasterCard do not blame you. They run world's finances. Besides that, there are specialized companies who exist and make billions that are supposed to track dangers like that - these are the 4 big audit firms. EY and KPMG - those guys. So they get the heat. And Merkel of course. Who else? -)
Truth to say, every payments company which ever went to IPO and accepted so called high-risk merchants (casinos, forex etc) for the last 25 years ended up just the same way as Wirecard - criminal allegations and CEO's behind bars. Just check out the story of Netelleer.
Seen the Snatch movie? "Have you got anything to declare? - Yes, don't go to England". Same story. If you accept high-risk biz don't get listed on IPO until the IPO regulations change in such a way that its no longer dangerous.