U.K. FCA Is Investigating Eight People Over Tax Scandal

The U.K. markets regulator is investigating eight people connected to the Cum-Ex tax scandal before it was effectively stopped in its tracks by a London judge.

The February data on the Financial Conduct Authority investigations was disclosed by London law firm Rahman Ravelli Wednesday following a Freedom of Information request. The number is up from the six people that Bloomberg reported in October the FCA was investigating.

But the regulator has been stymied since then after a judge ordered its most advanced probe into a trader halted until next year. That’s when a separate court is set to decide on a civil lawsuit brought by Danish tax authorities against Sanjay Shah, a former hedge fund manager.

“The FCA does seem to be struggling to sanction those it believes are responsible for wrongdoing related to Cum-Ex,” said Aziz Rahman, a name partner at Rahman Ravelli.

The judge’s decision was a setback for the FCA, which argued that the case was of public importance -- with many of the traders involved in the Cum-Ex schemes operating out of London. The regulator has sought permission to appeal after the judge said the investigations were not “one of the FCA’s high priorities.”

The Cum-Ex scandal has spread across Europe over a trading strategy that allowed investors to claim multiple refunds on a dividend tax that was paid only once. At least three countries are seeking the extradition of finance professionals who participated in the schemes.

©2021 Bloomberg L.P.

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