German prosecutors charge four former Commerzbank staffers over Cum-Ex deals

Frankfurt prosecutors have charged four former Commerzbank AG employees for their alleged roles in orchestrating Cum-Ex trades, the dividend-stripping scheme that has become Germany’s most sprawling tax fraud scandal. The charges, filed by the Frankfurt General Prosecutor’s Office, accuse the group of causing more than €20 million in tax losses to the state of Hesse through trades executed in 2008. The defendants include two British nationals, ages 66 and 59, a 61-year-old German national, and a 60-year-old American. Three of them were based in London, with one operating out of Frankfurt. Together, prosecutors allege, they collaborated across borders to exploit what were then gaps in German tax law, turning dividend payouts into a machine for generating fraudulent refund claims. How the Cum-Ex scheme worked Cum-Ex was essentially a high-speed shell game played around dividend dates. Traders would rapidly buy and sell shares in the narrow window surrounding a company’s dividend payout, creating the appearance that multiple parties owned the same shares simultaneously. Each party would then claim a tax refund on dividend withholding tax, even though the tax was only paid once. The sc...