German prosecutors search Morgan Stanley‘S
offices in Frankfurt on Tuesday were involved in a years-long tax fraud investigation that has embroiled a number of financial firms across Europe.
In addition to the bank, authorities searched the homes of the two suspects in the case, the Cologne prosecutor’s office said. It aims to collect emails and written correspondence, it added.
A spokesperson for Morgan Stanley said: “The investigation involves historic activity and we are continuing to cooperate with the German authorities.
The poll focused on former cum/old trades, which are transactions conducted a few days before and after companies’ scheduled dividend payments.
Pooling/exporting transactions typically involve banks, brokerage firms, hedge funds, and wealthy individuals entering into agreements to buy, borrow, and sell shares over a short period of time around the sale of shares. Dividend Payment. Carefully coordinated transaction times have allowed many parties to claim a refund of the tax paid on dividends.
German officials argued that tax credits were artificially claimed through these types of transactions in ways that could constitute fraud. The German government moved to block such transactions in the country and closed the tax loophole in 2012.
German authorities search Bank of America Corp.
and Barclays PLC in March in a similar investigation.
A Bank of America spokesperson said: “The prosecutor’s investigation into the historic activity dates back to 2006. We are working with authorities to assist them with their inquiries. A Barclays spokesman said the bank was cooperating with authorities.
Cologne prosecutors are investigating about 1,500 suspects in 110 cases, it said in an emailed response. Some of the defendants were sentenced to prison by a court in Bonn, it added.
The probe has also been launched by other countries, including Denmark and Austria. Germany, involving prosecutors in Cologne, Munich and Frankfurt, has been going on for years. In many cases, the bankers involved are no longer employed in the bank.
Some banks have settled with the authorities on issues related to cum/old. Hypovereinsbank, UniCredit SpA.
Germany’s unit has paid a total of 19.8 million euros, or about $20.9 million, in fines under agreements between 2015 and 2017.
Shares of Morgan Stanley rose 1.5% in early trading Tuesday.
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