CumEx Trading Investigations

Cum-Ex fraud refers to large-scale tax fraud schemes that exploit legal loopholes in dividend tax systems across Europe. These schemes often involve the rapid trading of shares between multiple parties and financial institutions (banks, investors, brokers) around the dividend date, with the aim of blurring ownership of the shares so that more than one party appears entitled to claim a refund of dividend withholding tax.

If you or a business are facing an investigation into Cum-Ex trading, JMW can provide the expert legal advice and early legal representation that you need. Our solicitors are experts in a range of corporate offences and can support you at all stages of the process, from when investigators first execute a search warrant or dawn raid, through to any court proceedings that may arise as a result.
Call JMW on 0345 872 6666 or complete our online enquiry form and a member of the team will give you a call back as soon as possible. We have extensive experience and knowledge of this area of the law, and a track record of success in defending businesses during these investigations.

How JMW Can Help

Our team has a proven track record of advising both individuals and corporations in investigations by the SFO (Serious Fraud Office) and FCA (Financial Conduct Authority) in high-profile cases involving conspiracy to defraud, cheating the public revenue, bribery, corruption and insider dealing. Individually, we have experience in representing numerous employees of global banks in relation to LIBOR investigations and prosecutions by the SFO.

We have also defended employees of companies in investigations and prosecutions by the FCA into running collective investment schemes and conspiracy to defraud. As such, we are in a strong position to defend against allegations of tax fraud related to dividend payments and can support you at all stages of the process if you are facing an investigation.

Many Cum-Ex investigations involve different jurisdictions, and JMW's team is experienced in working across borders. We can represent you during interviews at a police station, attend and monitor dawn raids carried out by investigators, and deal with the SFO, FCA or other investigating bodies (such as the National Crime Agency) on your behalf. If you are concerned about the serious consequences of being accused of financial crime, contact us today.

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Cum-Ex Trading Investigations Explained

Cum-Ex trading schemes have more commonly been known as dividend arbitrage strategies, or more pejoratively called dividend stripping, amongst European financial markets for many years. They are particularly common under German law but remain a relatively common form of tax fraud throughout Europe.

At its simplest, it involves the use of multiple European jurisdictions to take advantage of a ‘withholding tax’ that exists in some member states and revolves around the reimbursement of tax payable on dividends. Shares are traded among multiple parties in quick succession, which can make it difficult to verify whether the parties involved are eligible for a tax rebate. Following these rapid Cum-Ex transactions, the final party files for reimbursement of the relevant withholding tax, which may have never been paid or have been paid only once but claimed back multiple times, depending on the nature of the scheme.

Although the UK does not have a withholding tax scheme, this has not stopped allegations from some quarters that Cum-Ex trading schemes have been set up and run from London. Cum-Ex trading schemes are gaining increasing scrutiny from the authorities and anyone who has been a party to the setting up or operation of such schemes is vulnerable to an investigation. This includes lawyers, accountants, traders and other professionals who have advised on and ratified Cum-Ex trading schemes.

An investigation is extremely disruptive and time-consuming to any individual or business and needs to be carefully managed from the outset. The disruption caused can be heightened in circumstances where authorities exercise their power to freeze assets, often restricting the use of those assets and frustrating day-to-day activity. Further, in the event of a successful prosecution, an application may be made to strip individuals of the totality of their assets, which often has a devastating and long-lasting impact.

Who Can Be Held Responsible in Cum-Ex Cases?

It is important to instruct an experienced fraud lawyer if you are suspected of Cum-Ex fraud or are subject to a criminal investigation. Not everyone involved in such schemes will have committed a criminal offence. For example, being a party to a tax avoidance scheme might raise moral issues for some, but it is not necessarily illegal, whereas tax evasion is fundamentally illegal. As such, it may be possible to put forward a suitable defence if you are alleged to have participated in this type of fraud.

Cases of this nature are becoming more common in the financial services sector, but the team at JMW has a wealth of experience and can help to build an appropriate defence if you find yourself under investigation.

What Are the Potential Outcomes of a Cum-Ex Investigation?

The potential outcomes of a Cum-Ex investigation depend on the role of the individual or institution involved and the nature of the evidence that arises. The case may be referred to the Crown Prosecution Service and result in formal charges, which could include a conviction for tax fraud. The sentences for tax fraud cases can include imprisonment, suspended sentences or fines, and assets may be subject to proceedings under the Proceeds of Crime Act 2002 to recover any funds that are deemed to have arisen from criminal activity.

Financial regulators may impose disciplinary measures against individuals and firms found to have engaged in or facilitated Cum-Ex trading, including licence revocations or bans from regulated activities. This can include the personal disqualification of directors or compliance officers, and regulatory penalties if the person or organisation breached FCA rules.

Finally, institutions named in investigations can face public scrutiny and media exposure, which may result in a loss of client confidence or pressure from shareholders. In some cases, involvement in Cum-Ex investigations has triggered internal investigations, leadership changes, and withdrawal from entire market sectors. However, with prompt action and the right legal advice, you can put forward your defence and minimise the risk of unfair penalties or consequences.

Why Choose JMW?

At JMW, we know that legal issues can do significant reputational damage to both an individual and a business, and we offer a comprehensive range of services during SFO, FCA and HMRC investigations to support you and maintain your defence.

We can provide expert advice to establish whether an individual or corporation is potentially liable and consider whether their acts amount to criminal conduct. In our experience, even in circumstances where the scheme is deemed fraudulent, it is rare for all those involved and under investigation to be aware of the impact of their involvement or of the overall dishonesty of the scheme. A careful analysis of the individual role is essential, and our expertise in white collar crime means we can help to secure the best possible outcome.

As a full service law firm, JMW can also offer media and reputation management services, which are designed to protect you against the potential ramifications of a fraud case. Call us today to discuss your situation and learn more about how we can help.