* FREP says working closely with BaFin
* Shares down 32% midafternoon, after steep fall on Tuesday (Updates with shares, background, seeking comments)
FRANKFURT, Sept 16 (Reuters) - Germany’s accounting watchdog is scrutinising the balance sheets of German financial services provider Grenke following a critical report by a short-seller, the body’s president said on Wednesday.
The disclosure follows a second consecutive day of steep drops in the company’s shares - despite the company’s denial of the allegations. Germany’s financial market regulator, BaFin, has also launched its own investigation.
Edgar Ernst, president of the privately-owned Financial Reporting Enforcement Panel (FREP), told Reuters: “We are looking at Grenke and are in close cooperation with BaFin.”
The turmoil began on Tuesday, with the publication of a report by Viceroy Research, which raised the alarm and bet big against collapsed payment company Wirecard. It accused Grenke of malfeasance including money laundering.
“This report contains allegations which Grenke strongly rejects,” Grenke said late Tuesday.
The shares continued their decline throughout Wednesday, trading down 32% at 1240 GMT.
The company did not respond to requests for comment on Wednesday. (Reporting by Patricia Uhlig and Tom Sims Editing by Michelle Adair)
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