
It May Be the Biggest Tax Heist Ever. And Europe Wants Justice - cs702
https://www.nytimes.com/2020/01/23/business/cum-ex.html
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LorenPechtel
They passed ineffective laws against it. To me that strongly suggests it
actually was legal even thought the state didn't want it to be.

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eutropia
This sort of reasoning is why we have judges, though. If the law isn't capable
of preventing something that requires a rube-goldberg machine of trades and
positions, then a judge using common sense ought to be able.

It's pretty clear that one tax refund should be claimed one time, and
suggesting the contrary (that claiming it twice is OK, e.g. that cum-ex is
fine) is mental gymnastics to justify fraud/theft.

If someone is ok with stealing from the government (aka, your fellow
taxpayers) then they should be willing to accept the consequences of being
caught.

~~~
lacker
A principle like “one tax refund should be claimed one time” is not clear at
all. There are hundreds of different rules for getting refunds on your taxes
and many of them can be used multiple times.

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SamReidHughes
What was the actual mechanism they exploited that made them think or pretend
to think that this was legal? There is some explanation in the Wikipedia
article but it doesn't describe how the refund was untied from, say, actually
receiving a dividend, or the payment of some tax that would get refunded.

[https://en.m.wikipedia.org/wiki/CumEx-
Files](https://en.m.wikipedia.org/wiki/CumEx-Files)

~~~
itcrowd
As I understand it, it "wasn't considered illegal" and for some shady minds
that means it is legal, even if highly dubious or morally wrong. The mechanism
that made it possible was outlawed at some point, I think 2011, but the fraud
continued.

There is a simplified explanation of the mechanism here [1], from which the
following is taken:

> Simplified, cum-ex trading works something like this:

> Party One [..] "lends" its stock to Party Two, a bank. Under the agreement,
> the title and ownership of the stock is temporarily transferred to the
> borrower in return for a fee. [..]

> Party Two then sells the shares with-dividend to Party Three fractionally
> before the Record Date [i.e. dividend soon-to-be-payed]. However, the shares
> are delivered without-dividend just after.

> Like a magic trick, the shares "disappear" fractionally before the Record
> Date and "reappear" with a new owner just after. The aim is to obscure
> exactly who – Party One, Two or Three – owns the stock on the Record Date.
> As a result, two parties can simultaneously claim ownership of the one
> stock.

> Up until 2011, a loophole in the German tax code allowed both Party One and
> Party Three [..] to claim a tax reimbursement. All colluding parties would
> then split the gains.

[1] [https://theconversation.com/the-robbery-of-the-century-
the-c...](https://theconversation.com/the-robbery-of-the-century-the-cum-ex-
trading-scandal-and-why-it-matters-124417)

~~~
ChainOfFools
> As a result, two parties can simultaneously claim ownership of the one
> stock.

interesting, a very special case of double-spending attack, but on a security?
was this kind of thing much more commonplace before electronic trading systems
came about

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jaytaylor
Paywall bypass:

[http://archive.is/8J8tC](http://archive.is/8J8tC)

