It’s now official. The Cum/Ex was not a loophole but a pure and simple money grab.
The German supreme court (aka, the German Federal Court of Justice) has backed the conviction from two former London investment bankers from MM Warburg, and upheld the seizure of Eur 176 m of profits from MM Warburg.
It also confirmed what the German law thinks of the whole Cum/Ex trading strategy:
“This was no loophole,” Rolf Raum, the presiding judge, said in explaining the verdict. “It was a blatant grab from the bag that holds all taxpayers’ contributions.”
Warburg expressed its disappointment and commented that “it hadn’t been given a fair chance to defend itself the seizure of the money,” and “is now considering its next legal steps.”
Well, good luck on your next step. Not only the private bank is unlikely to survive the judgement, but it confirms that thousands of suspects involved in the tax transactions are likely to end up in jail.
The first of many
Dozens of companies are entangled in that net
- ICAP was a main broker for those trades, and ends-up as a nexus of the litigations
- Macquarie revealed in 2018 that 30 of its staff are involved, including its CEO, after a leak put it in evidence.
- German prosecutors have filed more indictments against bankers and attorneys. To the point that the courts of justice are doubling their staff or building new offices to handle the court proceedings.
- The FCA considers the trading strategy as abusive, and is collaborating with European authorities.
- In November 2019, German authorities raided 19 locations simultaneously in various parts of Germany.
- The Cologne prosecutors are conducting at least 10 investigations.
- J. Safra Sarasin is also involved after a whistleblower leaked information to Swiss authorities.
- A Commerzbank‘s board member resigned after the German government lost confidence in him.
- HSBC Deutschland confirmed it is under investigation and cooperating, but denies its participation.
To be continued… for the years to come…
References from the press
- The Sydney Morning Herald, July 29, 2021: Dividend-tax trades were criminal and ‘blatant’ money grab, German court says
- Bloomberg, June 2021: A Banker’s Long Prison Sentence Puts Industry on Alert
- Reuters, March 2021: Commerzbank chairman hopeful resigns over cum-ex share-trade probe – sources
- Global Ris Regulator, September 2020: FCA likely to go after participants involved in cum-ex trading strategies
- DW.com, November 2019: Cum-ex tax fraud: German police carry out raids in four states
- The Sydney Morning Herald, September 2018: ‘Nicholas wants it’: Macquarie Bank CEO’s role in tax deal revealed
Previous Navesink articles
- Navesink International, June 2021: Cum/Ex: the first jail sentence is frightening German finance
- Navesink International, April 2021: ICAP, the spider in the Cum/Ex web
- Navesink International, February 2021: Paul Mora receives the first Interpol warrant in the Cum/Ex tax trading strategy
- Navesink International, January 2021: Sanjay Shah is charged with stealing $1.6b from Danish tax authorities