German prosecutors search Deutsche Bank HQ in cum-ex probe

German prosecutors search Deutsche Bank HQ in cum-ex probe

18 Oct    Finance News

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BERLIN — German prosecutors have searched the headquarters of Deutsche Bank in connection with an ongoing investigation of the multibillion-euro tax fraud scheme known as “cum-ex,” Deutsche Bank said on Tuesday.

Deutsche is one of many banks that prosecutors have searched in connection with the tax scheme that thrived more than a decade ago.

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Germany’s largest lender, under Chief Executive Christian Sewing, has been trying to clean up the bank’s reputation since he assumed the helm in 2018.

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In the trading scheme, known as “cum-ex” or dividend stripping, banks and investors would swiftly trade shares of companies around their dividend payout day, blurring stock ownership and allowing multiple parties to falsely reclaim tax rebates on dividends.

The loophole, now closed, has also snowballed into a political scandal, forcing

testimony earlier this year

from German Chancellor Olaf Scholz.

The probe has long taken on vast dimensions. Government officials say it involves some 100 banks on four continents and at least 1,000 suspects.

Deutsche said it has been cooperating with investigators on the topic since 2017 and was continuing to do so.

Reuters has reported Deutsche Bank’s involvement in the scheme between 2006 and 2011, when bankers discussed the “reputation risks” of the matter. Deutsche lent money to companies to carry out the trades.

Handelsblatt first reported the search. (Reporting by Tom Sims, Marta Orosz and Maria Sheahan; editing by Matthias Williams and Miranda Murray)

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