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Germany searches bank association offices over share dividend trades

Published on August 04, 2020

German investigators were searching the offices of the country’s banking association on Tuesday in relation to a multi-billion-euro share dividend tax fraud scandal.

The public prosecutor’s office in Cologne said searches are being carried out at the Berlin and Frankfurt offices of the Association of German Banks over allegations of tax evasion over so-called “cum-ex” transactions.

“The proceedings are not directed against the association’s managers or employees,” the Cologne public prosecutor’s office said.

“The search is intended to find evidence that may be important to the ongoing investigation and to further clarify facts,” it added.

The association, which represents more than 200 private commercial banks, said: “We are cooperating fully with the authorities.”

First exposed in 2017, the scam involved numerous market participants quickly exchanging shares amongst themselves around dividend day, in order to claim multiple tax rebates on a single payout.

In March, a court in Bonn handed two British former investment managers suspended sentences and millions of euros in fines in a landmark trial related to the scandal.

Germany changed the law in 2012 to close a loophole exploited by the practice.

A finance ministry spokesperson said last September that 2.4 billion euros worth of repayments had already been demanded after the ministry identified 499 cases of suspected cum-ex fraud worth 5.5 billion euros.

Around 100 people have been indicted over the scandal, including bankers, stock traders, lawyers and financial consultants, according to German daily the Frankfurter Allgemeine Zeitung.