LONDON  - Fintech disruptors like to think of themselves as different to stuffy old banks. The recent accounting controversy and share-price collapse at 15 billion-euro payments darling Wirecard shows they can face many of the same old problems.

The company run by Markus Braun, which sells online-payments software to merchants, on Monday denied two Financial Times reports alleging that Wirecard and its lawyers may have seen evidence of false accounting. While shares rose about 16 percent after Braun said there was no conclusive proof of misconduct, the company’s market value is still 27 percent - or 5.5 billion euros - below its level before the first FT report on Wednesday.

The move seems extreme, at least when compared to the mere 37 million euros of potentially suspicious transactions mentioned in the Financial Times’ first article. The selloff’s size is probably down to hostile short-sellers - who have targeted the company in the past - and because of the nature of the allegations. The ability to detect suspicious transactions is part of the package Wirecard sells to customers, so any suggestion of weak controls potentially undermines its raison d’être.

Braun’s job now is to assuage investors who are wondering whether Wirecard’s shares are still worth holding. He could start by learning from the banks he is seeking to displace. Braun revealed on Monday that his compliance team, which typically acts like a company’s internal police force, is just 20-strong. That’s equivalent to 0.4 percent of the workforce. HSBC, by comparison, said it had 6,000 compliance staff in 2017, or 2.6 percent of its workforce at the time.

Second, Braun could reassure investors that the group’s growth is prudent, and that it’s not taking too much risk in far-flung locations, as banks like Goldman Sachs and Credit Suisse have experienced in Malaysia or Mozambique. The focus of the FT articles was Wirecard’s fast-growing Asia-Pacific businesses. Revenue there rose by three-quarters year-on-year in the first nine months of 2018 to 663 million euros. But it’s hard for investors to see how healthy that part of the business is, given Wirecard doesn’t usually disclose how much of the growth is down to winning new customers organically, rather than snapping up smaller rivals. A little more sunlight would soothe investors’ fears.

CONTEXT NEWS

- Wirecard on Feb. 4 said that neither it nor its law firm had found conclusive evidence of criminal misconduct after the Financial Times alleged wrongdoing at the Singapore office of the German payments company.

- Chief Executive Markus Braun said the Munich-based company had informed regulators in Germany and Singapore of investigations by its own compliance team and law firm Rajah & Tann into concerns raised last April by a member of staff.

- "Until today they didn't find any proof, or conclusive findings, that any of these allegations are true," Braun told analysts on a conference call. Braun said he expected the external probe to end quickly. He pledged to disclose its findings in full: "We do not expect any material thing to come up from this process."

- Wirecard had previously dismissed two FT reports as "inaccurate, misleading and defamatory". Its shares were trading at 125.9 euros at 1430 GMT on Feb. 4. That was 16 percent higher than their Feb. 1 closing price, but 26 percent below their Jan. 29 closing price.

(Editing by Neil Unmack and Martin Langfield)

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