Posts by Ian Gaskell
SPOOFING INTRODUCTION

There have recently been a number of high profile “Spoofing” cases in the US, resulting in several convictions of traders. Spoofing is a form of market abuse which can sometimes be subtle, and hard to distinguish from “normal trading”, and is therefore challenging to monitor.

However, there is a clear message from authorities that spoofing is market abuse and will not be tolerated - so the responsibility falls firmly on senior management to ensure that the level and quality of trader surveillance is  adequately robust to prevent spoofing. …

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Ian Gaskell
Cum-Ex Trading – Update and Frequently Asked Questions – Series 2

In the last Series, we covered some of the basics of Cum-Ex trading – how the trade works, what factors can create a duplication of withholding tax reclaims and what a short seller is.

In the next few series we will be going over products alternative to shares that could be used in Cum-Ex. In Series 2 we look at ETFs.

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Cum-Ex Trading – Update and Frequently Asked Questions – Series 1

A lot has happened since FMCR last published “Were ADRs used for Cum-Ex Trading” and “Cum-Ex trading – is your firm affected?” – two British traders have been found guilty of tax evasion, more participants have been indicted, new European jurisdictions have launched investigations and the FCA have started investigating the involvement of a number of UK institutions and individuals in Cum-Ex.

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Were ADRs used for Cum-Ex Trading?

Since 2017, SEC has issued monetary settlements totalling over $432mm across 15 institutions for improper handling of “pre-release” American Depositary Receipts (ADRs) and it has yet to be revealed how many other institutions are still under investigation.

The SEC states in one related filing that:

the structured transaction was priced by splitting up portions of the foreign tax that was not paid on the dividend.

This sounds very much like the signature of a Cum-Ex transaction.

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Cum-Ex Trading crosses the Atlantic through ADRs

The SEC’s ongoing investigation into “pre-release” American Depositary Receipts (ADRs) has opened up another avenue into the complex world of Cum-Ex trading.

This revelation calls into question some of America’s top investment banks and brokers.

Pre-release ADRs potentially enable another variation of the Cum-Ex trades that have convulsed financial markets across Europe.

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Cum-Ex Trading - is your firm affected?

First charges are now being brought by Cologne prosecutors who have been leading criminal investigations into Cum-Ex.

Two London traders are facing criminal charges in court proceedings that began on 4th September in Germany’s elaborate tax case.[1]

The impact of the alleged tax trading scheme has been estimated at €55bn but could be over €80bn and is said to extend to Germany, Denmark, Austria, Belgium, France, Spain, Italy, the Netherlands, Finland, Norway and Switzerland.[2] The case is only just beginning and the list of parties involved continues to grow.

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