For the first time, a German banker was convicted in the Cum-Ex scandal: the court found the former employee of a Hamburg private bank guilty of tax evasion and imposed a prison sentence of several years.
The Bonn Regional Court has sentenced a former employee of the Hamburg private bank MM Warburg to a prison term of five years and six months for so-called cum-ex transactions. The public prosecutor had accused the man of serious tax evasion in 13 cases. The court found him guilty on five counts. In view of the length of the proceedings, however, two months of the sentence are already enforced, said a court spokeswoman. The judgment is not yet final. The proceedings had started on November 17, 2020, according to the spokeswoman, the judgment was made on the 29th day of the hearing.
Bank continues to reject guilt
After the announced judgment, the Warburg Bank stated that the decision would not surprise after the stipulations of March 2020. “The primary responsibility of the domestic custodian banks and the initiators of the transactions is not sufficiently taken into account,” she said. “It is questionable whether the judgment will stand up to a possible revision in view of the numerous rejected bias requests and rejected requests for evidence.” The bank had already paid tax claims in connection with the cum-ex scandal last year, but always emphasized that the additional claims were unjustified. They are “not to be understood as an admission of guilt”. The money house always emphasized that it had adhered to the legal rules in all transactions. Several proceedings are ongoing at the Bonn Regional Court in connection with the Cum-Ex scandal, and investigations are being pooled at the Cologne Public Prosecutor’s Office. The court last admitted the indictment against a former employee of a Swiss private bank in May.
Decision on revision in the first Cum-Ex judgment
The German state suffered billions in damage in the cum-ex deals. Investors have a capital gains tax paid once on stock dividends reimbursed several times with the help of banks. To do this, they moved shares with – that is, cum – and without – ex – dividend entitlement to one another around the cut-off date for the dividend payment. The cases had spread widely, so banks and law firms are constantly being searched. In the first major criminal case nationwide, the court in Bonn imposed suspended sentences against two British stock traders in March 2020. The Federal Court of Justice (BGH) is reviewing the judgment and wants to negotiate an appeal on June 15. According to the BGH, all those involved have appealed. Until the first judgment, it was unclear whether cum-ex transactions are only inadmissible under tax law or whether they are also punishable by law.
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