German Prosecutors Raid Homes of HSBC Employees Over Cum-Ex

German prosecutors raided homes of 16 HSBC Holdings Plc employees and former top managers as part of their vast probe into the Cum-Ex tax dividend scandal.

(Bloomberg) — German prosecutors raided homes of 16 HSBC Holdings Plc employees and former top managers as part of their vast probe into the Cum-Ex tax dividend scandal.

The searches started Tuesday morning, people familiar with the matter said. Among the suspects targeted are former management board members and employees from various departments at the bank, according to one of the people.

Cologne prosecutors confirmed they are conducting searches at homes in the Dusseldorf area over Cum-Ex but declined to disclose any names, citing office policy. A spokesman for HSBC said the bank wasn’t raided and declined to comment further.

Cum-Ex was a trading strategy across Europe that siphoned off billions of euros in government revenue, by taking advantage of tax laws that seemed to allow multiple investors to claim refunds of a tax on dividends that was paid only once. Germany moved to abolish the practice in 2012.

While dating back more than a decade, the scandal still roils the financial industry. Prosecutors in Cologne are investigating more than 1,500 people and are ramping up the pressure on international banks. A long line of institutions were targeted by officials in recent months, including BNP Paribas SA, Bank of America Corp.’s Merrill Lynch, and Barclays Plc.

Separately, Frankfurt prosecutors said they charged a 57-year-old ex-managing director of a German Fortis unit, who in July was arrested in Spain over allegations he orchestrated Cum-Ex transactions that cost German taxpayers €51 million ($54 million). While they didn’t identify the man or the bank, people familiar with the issue at the time of his arrest said he worked for Fortis.

Fortis, parts of which were merged with ABN Amro NV, has long been targeted by Frankfurt prosecutors for its role in the tax scandal. ABN Amro’s Frankfurt offices were raided in 2019 as part of the probe.

(Updates with suspects ranks in second paragraph)

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