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Deutsche Bank Says Five Ex-Board Members Probed Over Cum-Ex (1)

March 20, 2020, 10:42 AM

Deutsche Bank AG said five former management board members are under investigation for tax evasion, days after the first two bankers were convicted in Germany’s long-running Cum-Ex scandal.

The bank disclosed the information in its annual report Friday without identifying the board members. The bank said it may also face seizures and fines.

Prosecutors in Cologne, who on Wednesday won their first convictions in the Cum-Ex probe, are looking at more than 500 people in the financial industry. The verdict this week found the complicated tax schemes were illegal and may prompt a new wave of charges.

“The investigation is still at an early stage and the scope of the investigation may be broadened,” the lender said. It didn’t say whether it had set aside any provisions to cover any financial penalties related to Cum-Ex.

The controversial transactions -- estimated to have cost taxpayers more than 10 billion euros ($10.8 billion) -- involved the rapid sale of shares just before a company paid a dividend. This allowed multiple investors to claim a tax refund on the same dividend payment, according to authorities.

In a separate case related to Cum-Ex, a former banker at the now-defunct Maple Financial Group Inc. was released on 6 million euros bail after being arrested in December.

London Bankers’ Cum-Ex Verdict Shows Inexperience Pays Off

Deutsche Bank has long been caught up in the Cum-Ex scandal. A year ago, people familiar with the probe said that there were 80 suspects at the lender, including former co-Chief Executive Officer Anshu Jain, his predecessor Josef Ackermann and former investment banking chief Garth Ritchie.

Deutsche Bank settled Frankfurt prosecutors Cum-Ex probe in 2018, people with knowledge of the issue have said. The lender agreed to pay 4 million euros to end that case, which reviewed its role as a custodian bank in the deals.

The practice was named after the Latin term cum/ex, meaning with/without, because the stocks were sold with and delivered without a dividend payment.

Read more: The German Tax-Dodge Probe That’s Roiling Banks: QuickTake

(Adds settlement with Frankfurt prosecutors in second-last paragraph.)

--With assistance from Donal Griffin.

To contact the reporters on this story:
Karin Matussek in Berlin at kmatussek@bloomberg.net;
Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net

To contact the editor responsible for this story:
Anthony Aarons at aaarons@bloomberg.net

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

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