Wirecard's fall from grace has prompted calls for an overhaul of Germany's system of corporate oversight.
The fraud scandal is threatening to further undermine the country's once-prized reputation for integrity.
Some foreign investors said Wirecard's admission that €1.9 billion booked in its accounts was likely never to have existed highlighted slipshod oversight and shortcomings in the way German executives are kept in check.
The revelation, which follows an emissions rigging scandal that engulfed Volkswagen in 2015, is likely to have wider repercussions for Germany, one of the world's biggest economies which prides itself on a reputation for rectitude.
Having earlier said the regulator "worked very hard and they did their job", Finance Minister Olaf Scholz changed tack today, criticising them in an interview with Reuters and promising to examine changing rules to monitor companies better.
Payments firm Wirecard unravelled after a whistleblower alleged in 2019 it owed its success to a web of sham transactions. This has prompted criticism of controls, following inaction by financial regulator Bafin, which comes under the watch of Scholz's finance ministry.
"The Ministry of Finance as well as Bafin have got explaining to do," Florian Toncar, a lawmaker in Germany's Bundestag, said.
Fellow parliamentarian Fabio De Masi called for supervision to be "turned on its head" after the arrest of Wirecard's former CEO on suspicion of falsifying revenue.
Felix Hufeld, head of Germany's financial watchdog Bafin, conceded that the affair was a "total disaster" and that his agency and others had made mistakes.
The regulator had focused on probing so-called short-sellers and journalists behind reports which questioned Wirecard's accounts, halting short-selling in the stock, rather than immediately investigating the company.
Barry Norris was one of those hedge fund managers who bet the shares would drop, becoming suspicious after a Wirecard executive showed him a '50-page presentation' packed with diagrams but with few numbers.
"The opacity was just extreme," Barry Norris, CEO of Argonaut Capital Partners, told Reuters.
Some fund managers said the answer would be to give non-executive directors more power to challenge German executives.
"In the case of Wirecard, the supervisory board did not seem to have the power to change behaviour," Kathleen Dewandeleer of Aberdeen Standard Investments in London said.
Some investors said the case underlined a long-standing German reflex to protect its companies, pointing to the earlier suspension on short-selling of Wirecard stock.
Many politicians in Germany, who have sought to play on the country's image for efficiency to bolster Frankfurt as a financial centre and win foreign investment, have been stung by the criticism.
"We would have expected such a situation anywhere else, but not in Germany," German Economy Minister Peter Altmaier said.