CumEx files: Financial market supervision considers Cum-Ex transactions morally questionable
The European Financial Supervisory Authority has published an interim report on the CumEx scandal. According to him, business in Europe may continue to operate.
The European Financial Market Authority ESMA has found evidence that tax-driven businesses such as Cum-Ex and Cum-Cum are still taking place today. After the publication of the CumEx files last year, the authority had started its own investigation.
A now published interim report based on data until the end of 2018 confirms the search results of the CumEx files. These were published under the direction of Correctiv at Panorama , the ZEIT, ZEIT ONLINE and other European media in October 2018. The research cooperation had found that fraudsters with tax-driven stock transactions had diverted at least 55.2 billion euros from German taxpayers' funds and at least 10 other European countries such as France, Belgium, the UK and others.
At the time, the reporters also received a market offer from a stock trader, which proved that these businesses are still going on today. For this research, they had disguised themselves as billionaires and filmed the conversation with the stock trader in the suite of a London luxury hotel with a hidden camera. ESMA initiated its investigation on the basis of the CumEx files.
"A devil machine creates"
Cum-cum deals serve to get hold of a tax refund, which is actually not entitled. With Cum-Ex, taxes are reimbursed twice, sometimes even more frequently, and paid only once. While at Cum-Cum shops in Germany has not been considered criminal liability, the criminal justice determined because of numerous cases Cum-Ex suspected. The deals in Germany worked around the time when the large public limited companies distributed their dividends - the annual dividend record date.
"We had created a devil machine, but it always ran only in the spring," explains an insider. "So you came up with the idea of creating a year-round machine," he says. "It offered shares in other countries, such as France, Spain and Italy, but also smaller countries such as Austria, Belgium, Denmark."
In concrete terms, ESMA has now established an increase in reverse convertible bonds around dividend cut-off dates relevant to these transactions. This applies inter alia to France, Denmark, Sweden, Belgium, the Netherlands and the United Kingdom. In Germany and Austria, however, these suspicious increases have declined significantly since the changes to laws and extensive media coverage.
The Green MEP Sven Giegold therefore demands that ESMA examines not only cum-ex and cum-cum, but all tax frauds with shares. In some countries, such as Belgium, Denmark and Sweden, the abnormalities have even increased in recent years.