UK fines broker $21 million for 'cum-ex' European tax scam
Reuters
Published Jun 05, 2023 17:24
Updated Jun 05, 2023 18:12
LONDON (Reuters) - Britain's Financial Conduct Authority (FCA) has fined broker ED&F Man Capital Markets Ltd (MCML) 17.2 million pounds ($21.35 million), its largest penalty yet in connection with Europe's 'cum-ex' tax scam.
The cum-ex trading scheme, which flourished after the 2008 global financial crisis, involved banks and investors swiftly dealing shares around dividend payout days, blurring stock ownership and allowing multiple parties to claim tax rebates.
The FCA said on Monday it had fined the broker for "serious failings" that led it to benefit from trading strategies designed to enable clients to illegitimately reclaim tax from Danish authorities.
The firm did not dispute the FCA's findings and agreed to settle, resulting in a 30% discount to the penalty applied, the watchdog said.
A MCML spokesperson said the fine related to a legacy business that was shut down in 2015.
The fine follows three smaller cases against brokers for similiar failings.
So far, the UK watchdog's enforcement activity linked to the scheme has been dwarfed by sprawling investigations led by Germany and Denmark, which officials have said span around 1,500 suspects and 100 banks on four continents.
The FCA said MCML's failings allowed some 20 million pounds of illegitimate tax reclaims to be made to Danish authorities by clients between 2012 and 2015, generating more than 5 million pounds of fees for the company.
Some of ED&F Man Capital Markets' assets were acquired by financial services firm Marex last year.
The MCML spokesperson said the business area that was subject to the FCA's action had been specifically excluded from the sale and was a contingent liability that had been ring-fenced as part of the transaction.
"It will now be possible to take the final steps in deregulating and closing the MCML business," the spokesperson added.
($1 = 0.8058 pounds)
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Written By: Reuters
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