A Banker Drew Macquarie Into Cum-Ex. It Became a Costly Bargain

In 2005, as Macquarie Group Ltd. executives plotted an aggressive expansion to transform the Australian infrastructure investor into a global financial force, a banker in London pitched them an idea.

Kaushik ‘Kush’ Obhrai, looking for his next assignment after leaving Morgan Stanley and Deutsche Bank AG, proposed a form of stock trade that exploited European dividend-tax laws. Executives at Sydney-based Macquarie hired him and forged ahead with the plan, later promoting him and praising his group as the deals paid off. The name of the strategy: Cum-Ex.

Yet Macquarie’s pursuit of such tax trades more than a decade ...