Bankers on trial for siphoning €60bn

[vonuber]

"They have been called “the men who plundered Europe”: a group of cowboy traders, seasoned tax lawyers and mathematical whizz kids who are alleged to have conspired in the heart of the City of London to siphon at least €60bn in taxpayers’ money from the state coffers of several EU countries."

https://www.theguardian.com/business/2019/sep/20/t...

https://www.economist.com/finance-and-economics/20...

https://en.m.wikipedia.org/wiki/CumEx-Files

Don't recall a thread on this.

[MrJuice]

What a lovely bunch

[turbobloke]

vonuber said:

"They have been called “the men who plundered Europe”: a group of cowboy traders, seasoned tax lawyers and mathematical whizz kids who are alleged to have conspired in the heart of the City of London to siphon at least €60bn in taxpayers’ money from the state coffers of several EU countries."

https://www.theguardian.com/business/2019/sep/20/t...

https://www.economist.com/finance-and-economics/20...

https://en.m.wikipedia.org/wiki/CumEx-Files

Don't recall a thread on this.

Juicy. If they're found guilty with appeals exhausted then the metaphorical drop will be long and painful, though if they're the men who plundered why not save the expense of a complex trial and go straight to sentencing.

Given the seriousness of the accusation, The Guardian manages to inject some humour. This affair 'exposes the City's pursuit of profit' what a revelation, only just exposed in September 2019 by The Guardian, everyone reading that article will remember where they were.

[poo at Paul's]

Whist they may have facilitated or allowed the multiple tax reclaims, surely it is the actual companies involved that actually reclaimed the dividend tax more than once? Or does the investment firm do that on the Company's behalf?

[Countdown]

Wonder why the UK isn't involved?

[Derek Smith]

turbobloke said:

Given the seriousness of the accusation, The Guardian manages to inject some humour. This affair 'exposes the City's pursuit of profit' what a revelation, only just exposed in September 2019 by The Guardian, everyone reading that article will remember where they were.

The full comment, and context gives meaning to the deceptively simply quote above. I know quote mining is PH's rraison d'être, but there are limits. Rather like in the City where profits are to be praised, but not at all costs.

It would appear that staff were brought in without training in the mores and rules of the City. These people, particularly the mathematicians, were let loose. The charges seem to be around the use of taxes to fund extravagant lifestyles. Whether their methods were legal or not is what the court will decide.

[stongle]

vonuber said:

"They have been called “the men who plundered Europe”: a group of cowboy traders, seasoned tax lawyers and mathematical whizz kids who are alleged to have conspired in the heart of the City of London to siphon at least €60bn in taxpayers’ money from the state coffers of several EU countries."

https://www.theguardian.com/business/2019/sep/20/t...

https://www.economist.com/finance-and-economics/20...

https://en.m.wikipedia.org/wiki/CumEx-Files

Don't recall a thread on this.

Its been covered at length and for months in the europe going into recession thread. Its old news anyway. The investigation has been all over the media for years.

The cum-ex wheeze was a small fraction of the yield or tax enhancement structures that "cost Europe 60bn". The movement of stocks to reduce withholding tax, accounted for most of these strategies - the banks facilitating this taken a fee for running the tax risk (which spectacularly backfired in Switzerland).

As for the primary beneficiaries? Got a pension with european equities in it - chances you did. The main lenders of the stocks were mainly pension or investment funds whom would have dividend witholding tax held at source. If your required to pay 15% WHT, you lend the shares to a German bank (say), and they receive dividends gross (100%), so split the difference. The financial benefit was until recently skewed towards the pension funds often getting 98% of the dividend (so the bank whom took the risk gets 2%).

[turbobloke]

Derek Smith said:

turbobloke said:

Given the seriousness of the accusation, The Guardian manages to inject some humour. This affair 'exposes the City's pursuit of profit' what a revelation, only just exposed in September 2019 by The Guardian, everyone reading that article will remember where they were.

The full comment, and context gives meaning to the deceptively simply quote above. I know quote mining is PH's rraison d'être, but there are limits. Rather like in the City where profits are to be praised, but not at all costs.

Your powers of expression trump those in play at The Guardian, where the equivalent of bottom set sixth-formers on work experience get to badmouth profit with soundbite simplicity, as though the NHS and social care and other public spending black holes - not forgetting their rag and their jobs supplying a tiny band of buyers with hard copy - would exist without it. Neither would their website, so job vacancies at the BBC would have to go in The Telegraph

The point is exactly as you say, and nowhere near what The Guardian portrays.

Here's hoping none of those charged are politically active and have lost a vulnerable child in tragic circumstances; also hoping that justice rather than lynchmobbery is served at the close of proceedings

[turbobloke]

stongle said:

vonuber said:

"They have been called “the men who plundered Europe”: a group of cowboy traders, seasoned tax lawyers and mathematical whizz kids who are alleged to have conspired in the heart of the City of London to siphon at least €60bn in taxpayers’ money from the state coffers of several EU countries."

https://www.theguardian.com/business/2019/sep/20/t...

https://www.economist.com/finance-and-economics/20...

https://en.m.wikipedia.org/wiki/CumEx-Files

Don't recall a thread on this.

Its been covered at length and for months in the europe going into recession thread. Its old news anyway. The investigation has been all over the media for years.

The cum-ex wheeze was a small fraction of the yield or tax enhancement structures that "cost Europe 60bn". The movement of stocks to reduce withholding tax, accounted for most of these strategies - the banks facilitating this taken a fee for running the tax risk (which spectacularly backfired in Switzerland).

As for the primary beneficiaries? Got a pension with european equities in it - chances you did. The main lenders of the stocks were mainly pension or investment funds whom would have dividend witholding tax held at source. If your required to pay 15% WHT, you lend the shares to a German bank (say), and they receive dividends gross (100%), so split the difference. The financial benefit was until recently skewed towards the pension funds often getting 98% of the dividend (so the bank whom took the risk gets 2%).

Very interesting stuff for those of us not camped out in the eu recession thread

[Mrr T]

stongle said:

As for the primary beneficiaries? Got a pension with european equities in it - chances you did. The main lenders of the stocks were mainly pension or investment funds whom would have dividend witholding tax held at source. If your required to pay 15% WHT, you lend the shares to a German bank (say), and they receive dividends gross (100%), so split the difference. The financial benefit was until recently skewed towards the pension funds often getting 98% of the dividend (so the bank whom took the risk gets 2%).

This is a bit different to the cum div scheme which was clearly illegal. Pension funds where not involved in div arb since they all get 100% on European equity. Other EU funds where but under EU law they where entitled to 100% via a reclaim the div arb just accelerates the process. Many EU governments made the reclaim process difficult.

Biggest players where SWF and governments. New ownership rules mean div arb in Europe is virtually dead.

[stongle]

There are always more than one way to sell a story, if we went with the version that throws the light on the biggest beneficiaries - it would read like this:

British OAPs undertake audacious Tax Raid on European Treasuries.

London sept 21st. British pensioners with savings
In Sottish Widows have enjoyed windfall profits through the use of established taxation treaty rates. Backed up by legal opinions, detailing the legitamacy of such structures with a "should level opinion" from Clifford & Chance and Freshfields - the pensioners have benefited to the tune of over eur40 billion.

The structure undertaken known as "cum cum" allows the pensioners to enjoy the same tax rates on dividends as German pensioners on European stocks or 100% of dividend income.

When quized on this tax raid, Brenda Smythe 79 from Tunbridge Wells explained her actions. "Interest income is near zero with rampant money printing and QE the cost of having my vajazzle done was going up 4 times faster than inflation; we had to take action".

Although there have been cries of failplay and confusion with the much smaller activity of cum-ex trading (under investigation where multiple fraudulent dvidend claims are made - potentially to the tune of 7bn), the pensioners have some support in UK politics. Nigel Farage leader of the BREXIT party said "these plucky pensioners have delived a great stake into the European Federalists warchest. They don't like it up em".


Of course it won't read like that, as confusing the facts makes for juicy numbers. There was almost certainly some wrong doing - Sanjay Shah being camped out in Dubai with his 100mil; doesn't towards innocence - but the facts are much deatiled and boring. Do people really believe these structures worked without complicit European banks??? You couldnt do it without them.

[stongle]

Mrr T said:

This is a bit different to the cum div scheme which was clearly illegal. Pension funds where not involved in div arb since they all get 100% on European equity. Other EU funds where but under EU law they where entitled to 100% via a reclaim the div arb just accelerates the process. Many EU governments made the reclaim process difficult.

Biggest players where SWF and governments. New ownership rules mean div arb in Europe is virtually dead.

No, they did not get relief on european holdings when these structures were running at full steam the EC didnt step into 5he fray on that till 2009. The business is not dead at all, just conducted through different structures.

There is a clear differentiation bewteen cum-ex and cum cum. One is likely ti be found highly illegal, the later unlikely to be (which is where most of the 60bn is). Its sloppy reporting.

Edited by stongle on Saturday 21st September 10:48