Morgan Stanley's Frankfurt Offices Raided As Part Of Cum-Ex Tax Fraud Probe

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by Tyler Durden
Wednesday, May 04, 2022 - 06:45 AM

German regulators have been staying busy over the last few weeks.

Just days after we noted that Deutsche Bank offices in Frankfurt were being raided as part of a money laundering probe the bank reportedly tipped regulators off to, it now looks like Morgan Stanley is also dealing with a regulatory raid by German prosecutors. 

The Morgan Stanley raid is related to the "rapidly widening" Cum-Ex scandal, which is centered on cross-border tax fraud. 

"Authorities are searching a bank and the homes of two suspects in a probe over Cum-Ex and related strategies," Bloomberg reported Tuesday morning, stating that more than 75 officers were on hand to take part in the raid. 

The same report notes that Morgan Stanley confirmed that it had been targeted and said that the investigation relates to a “historic activity” and that the bank is “continuing to cooperate with the German authorities.” 

The probe encompasses about 1,500 people from the financial industry and similar raids have been carried out at Barclay's and Bank of America/Merrill Lynch. Deutsche Bank is also said to face "major repercussions". 

Cum-ex reportedly diverted "at least 10 billion euros" in government revenue by exploiting German tax laws that allowed multiple investors to claim refunds of a tax on dividends that was paid only once, Bloomberg reported.

The practice was abolished in 2012, but the probe continues.