D.The fact that the “Cum-Ex” transactions were not carried out by a few people alone was shown by the criminal proceedings at the Bonn Regional Court in March 2020. Short sellers, investors, custodians, banks and numerous consultants were involved in the district transactions around the dividend date. Since then, there has been talk of crime on an industrial scale; the damage to the tax authorities is estimated to be 7 billion euros. Clearstream AG, a subsidiary of Deutsche Börse, and the respective domestic and foreign custodian banks also played central roles.
However, it seems as if the criminal courts have so far neglected the importance of the custodian banks. In the meantime, however, the claims of the custodian banks by the tax authorities and recourse actions before the civil courts are picking up speed. Landesbank Hessen-Thüringen (Helaba) is one of the most active plaintiffs. Because she bought shares from (foreign) investors shortly before the dividend cut-off date and had capital gains tax credited on a dividend that was allegedly not paid for her, she has to repay around 23 million euros in taxes.
Helaba wanted to get this back payment of around 23 million euros to the tax office as compensation from a subsidiary of the French bank Société Générale, but failed in the second instance in July 2020 at the Frankfurt Higher Regional Court. Unlike the first instance, the OLG assessed the role of SocGen not as a custodian bank, but as a broker. Helaba and several short sellers – there are a total of more than 30 individual deals – have agreed “pass-through deals” through this broker. Helaba has now appealed against the judgment to the Federal Court of Justice, as confirmed by the bank’s spokesman.
Helaba takes action against HVB
Similarly, Helaba sees a still little-known lawsuit that it has filed against Hypo-Vereinsbank (HVB) with the Munich Regional Court. This would have been the domestic custodian bank for (short) selling shares, which, according to Helaba’s legal opinion, was responsible for paying the capital gains tax. But in other processes, specifically between M.M. Warburg and Deutsche Bank as the custodian bank of the British share seller Icap, it played a role that the law responsible for the tax transfer does not refer to the domestic custodian bank, but to the agency responsible for selling shares. It is not necessarily the same.
In addition, many domestic custodians such as Deutsche Bank and BNP Paribas announced in almost identical circulars in August 2008 that they would not withhold capital gains tax. Whether they have freed themselves from the statutory withholding obligation for the body executing the share sale will have to be clarified in the civil proceedings and possibly first by the Federal Court of Justice.
In addition to the Helaba legal dispute, a second lawsuit in connection with “cum-ex” transactions is pending in another chamber for banking matters in Munich: from Caceis, which belongs to the French Crédit Agricole.
Caceis should make high back payments
Caceis was clearly the custodian of stocks (short) sellers around the dividend date and was condemned by the Bavarian tax authorities to an additional tax payment of 312 million euros in 2019. In Crédit Agricole’s 2019 annual report, it says that Caceis received the repayment notice for customer transactions from 2010 and – despite appealing – had to pay. Only the payment of an additional 148 million euros in penalty interest demanded by the tax authorities was initially deferred.
The French took over HVB’s securities settlement division in 2007. This happened while many of the stock trades were being conducted through an HVB trading desk in London. A spicy detail: The tax dispute between Caceis and the Free State of Bavaria should also involve HVB special funds, for which the French financial services provider has received multiple capital gains tax reimbursements.
Now Caceis apparently wants to take recourse against numerous other parties involved in “Cum-Ex” transactions. When asked, a spokesman for the Munich Regional Court I confirmed that two claims for damages are pending (Az. 28 O 18958/19 and 29 O 18967/19). However, they would still have to be served on all defendants. According to “Handelsblatt”, Caceis is said to have sued 29 actors for 300 million euros in addition to the key witness for the Cologne public prosecutor’s office, who testified again last week at the Bonn Regional Court. The Caceis litigation attorneys at the Hengeler Mueller law firm did not want to comment. As it became known, the key witness S., who had advised on cum-ex deals himself for years, filed criminal charges against lawyers at the major German law firm.
Allegations against Hengeler Mueller
Hengeler Mueller’s allegation of attempted fraud is likely to evoke bad memories: In 2014, two partners of the law firm faced a similar accusation in the lawsuit of Hengeler client Deutsche Bank and the heirs of media entrepreneur Leo Kirch. You should have prepared several bank managers, including the former CEOs Josef Ackermann and Jürgen Fitschen, for allegedly false statements in the civil process. The lawyers denied complicity in the attempted fraud, a criminal case against Ackermann and Co. ended with acquittals, which the Federal Court of Justice confirmed in 2019. In connection with Caceis, the law firm only says: “We firmly reject the accusation.”