German lawmakers have called it the "greatest tax heist" in history: the loophole in the tax law of Germany, Denmark, and the UK to pocket hundreds of millions of euros, if not billions, via a trading strategy known as "Cum-Ex" - or "With-Without."
In the past, we have noted Deutsche Bank, Morgan Stanley, Barclays Plc, and Bank of America Corp.'s Merrill Lynch's Frankfurt offices were raided as part of a money laundering probe.
This week, JPMorgan Chase & Co.'s Frankfurt office was raided as part of a widening Cum-Ex scandal centered on cross-border tax fraud.
"A spokesman for Cologne prosecutors on Wednesday said searches at an unidentified bank started on Tuesday and included the homes of four suspects and an auditing firm that isn't a target in the probe. More than 50 officers are involved, including specialists, to unearth evidence buried in emails," Bloomberg reported Wednesday morning.
JPMorgan confirmed to Reuters that their "Frankfurt offices were visited this week" by "German authorities on their ongoing investigation" in the share-trading scheme that cost taxpayers billions of euros.
Cum-Ex reportedly diverted "at least 10 billion euros" in government revenue by exploiting German tax laws that allowed multiple investors to claim refunds of a tax on dividends that were paid only once, Bloomberg reported.
For those who aren't familiar with Cum-Ex, here's a quick rundown showing how it works, courtesy of the Conversation:
Party One, typically an asset manager who owns valuable company shares, "lends" its stock to Party Two, a bank. Under the agreement, the title and ownership of the stock is temporarily transferred to the borrower in return for a fee. Such practices are not only legal but...