German prosecutors have filed charges against four former employees of Commerzbank (CBKG.DE) over alleged tax evasion for activity in 2008, the latest crackdown on an industry-wide scheme that cost taxpayers billions of euros.
The practice, which flourished during the financial crisis and has since ensnared scores of banks and hundreds of individuals, involved the stock trading of German companies around dividend payout days. Authorities say it defrauded the state and taxpayers.
Prosecutors in Frankfurt said on Thursday that the four individuals — two British citizens, one German and one American, between the ages of 59 and 66 — were facing charges under "suspicion of serious tax evasion".
Prosecutors said the bank was based in Frankfurt, but they didn't name it. Two people with direct knowledge of the matter told Reuters the bankers worked for Commerzbank.
"We do not comment on legal proceedings involving third parties. Commerzbank is not a party to the proceedings itself," the bank said in a statement.
The practice of so-called cum-ex trading, also known as dividend stripping, saw banks and investors swiftly trade shares of companies around their dividend payout day, blurring stock ownership and allowing multiple parties to falsely reclaim tax rebates on dividends.
Frankfurt prosecutors said this particular case shortchanged the state of Hesse, Commerzbank's base, of €20 million.
"The defendants are alleged to have developed, approved, and executed the so-called cum-ex transactions through deliberate and intentional collaboration," the prosecutors said.
Commerzbank, which Italy's UniCredit (CRDI.MI) has been pursuing for a potential tie-up, has warned in its financial reports that prosecutors were investigating the trades and that the bank was cooperating.
Sueddeutsche Zeitung first reported that the bankers formerly worked for Commerzbank.
