Status: 06/22/2022 11:32 a.m
The securities specialists of the Sparkassen-Finanzgruppe have the public prosecutor’s office in-house. Investigators search DekaBank offices in Frankfurt and private apartments for cum-ex transactions.
Offices of DekaBank in Frankfurt have been searched since yesterday as part of investigations into stock deals around the dividend date. Current and former board members are also said to be among the accused. According to the search warrant, the potential damage could be in the billions.
DekaBank confirms searches
Björn Korschinowski, Head of Corporate Communications at Deka Bank, confirmed tagesschau.dethat authorities have been searching the headquarters in Frankfurt in connection with cum-ex transactions since yesterday. Deka Bank is fully cooperating with the public prosecutor. The raid is still ongoing.
The Cologne public prosecutor had previously stated that they had been executing search warrants against a bank in Frankfurt and against an auditing company in a cum-ex procedure since Tuesday. She didn’t name names. In addition, the private homes of eight suspects would also be searched. About 110 officers are on duty.
“Committed to Ethical Conduct”
According to informed circles, DekaBank is said to have commissioned an external expert for the cum-ex transactions some time ago. The securities house of the German Sparkassen-Finanzgruppe says it is committed to “ethically correct behavior”.
The in-house code of ethics is “the basis for the corporate culture of the Deka Group and guarantees that we always act in accordance with the law, openly and transparently and that we are guided by added value”, according to the bank’s promise.
DekaBank had to write off more than 50 million euros
DekaBank was one of the first banks ever to become publicly aware of its involvement in the cum-ex scandal. In February 2016, the institute failed before the Hesse Finance Court with a 53 million euro lawsuit.
The Sparkassen-Finanzgruppe securities firm reclaimed capital gains tax from cum-ex deals it settled in 2010. DekaBank accepted the judgment after a reflection period of two months and did not appeal to the Federal Fiscal Court. The withdrawal had caused disappointment in the industry at the time, and other banks had also hoped for a landmark ruling.
Foreign banks also targeted
Because DekaBank is by no means the only bank involved in the Cum-Ex scandal. The Cologne public prosecutor’s office is investigating around 1,500 people from the financial sector because of questionable stock deals around the dividend date.
Most recently, the investigators had also increased the pressure on international banks and, among other things, searched the offices of British Barclays and Bank of America Merrill Lynch.
How do cum-ex deals work?
In cum-ex trades, shares are traded by several participants around the dividend record date, i.e. shares with (Latin: “cum”) and without (“ex”) dividend entitlement.
As a result of this confusion, it was often unclear to the tax authorities who was entitled to a tax refund for the automatically deducted capital gains tax. In the end, the investors had the capital gains tax paid only once reimbursed several times – and thus cheated the German state and the taxpayers.
Biggest tax scandal to date
A year ago, in July 2021, the Federal Court of Justice (BGH) ruled: Cum-Ex transactions are illegal and constitute criminal tax evasion. This makes the Cum-Ex scandal the biggest German tax scandal to date.
From 2001 to 2016, bankers, lawyers and investors defrauded the German state of billions of euros with tax tricks related to dividend payments: through the classic cum-ex business of at least 10 billion euros and with the related and later executed cum-cum businesses of at least more 28 billion euros.
Cum-cum deals are similar to cum-ex deals. But this is about circumventing tax rules for foreign owners of German shares. Cum-cum deals have been banned in Germany since 2016, and cum-ex deals since 2012. Worldwide, the damage caused by cum-ex and cum-cum deals by banks and investors amounts to at least 150 billion euros.