The UK’s financial regulator hit ED&F Man Capital Markets Ltd. with a £17.2 million ($21.3 million) fine over its role in controversial Cum-Ex tax transactions.
(Bloomberg) — The UK’s financial regulator hit ED&F Man Capital Markets Ltd. with a £17.2 million ($21.3 million) fine over its role in controversial Cum-Ex tax transactions.
The Financial Conduct Authority said ED&F Man “enabled” significant volumes of dividend arbitrage trading that allowed millions of euros to be illegitimately claimed from Danish tax authorities. It’s the fourth case brought against London brokers in relation to the trades and the largest penalty yet.
“It is completely unacceptable for authorized firms to make money from this kind of trading,” said Therese Chambers, the FCA’s Joint Executive Director of Enforcement and Market Oversight.
ED&F Man didn’t dispute the FCA’s findings and was given a 30% discount in the fine.
Danish and German investigators separately raided the London offices of ED&F Man in November.
Cum-Ex took advantage of tax laws that seemed to allow multiple investors to claim refunds of a tax that was paid only once. Germany abolished the practice in 2012. Some traders then targeted Denmark in similar trades and the country has said it suffered a loss of more than $2 billion.
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