German prosecutors charge four former Commerzbank staffers over Cum-Ex deals

Frankfurt prosecutors have charged four former Commerzbank AG employees for their alleged roles in orchestrating Cum-Ex trades, the dividend-stripping scheme that has become Germany’s most sprawling tax fraud scandal. The charges, filed by the Frankfurt General Prosecutor’s Office, accuse the group of causing more than €20 million in tax losses to the state of Hesse through trades executed in 2008.

The defendants include two British nationals, ages 66 and 59, a 61-year-old German national, and a 60-year-old American. Three of them were based in London, with one operating out of Frankfurt. Together, prosecutors allege, they collaborated across borders to exploit what were then gaps in German tax law, turning dividend payouts into a machine for generating fraudulent refund claims.

How the Cum-Ex scheme worked

Cum-Ex was essentially a high-speed shell game played around dividend dates. Traders would rapidly buy and sell shares in the narrow window surrounding a company’s dividend payout, creating the appearance that multiple parties owned the same shares simultaneously. Each party would then claim a tax refund on dividend withholding tax, even though the tax was only paid once.

The scheme peaked during the financial crisis era, roughly between 2006 and 2011, before German legislators closed the loophole in 2012. By that point, estimates of the total damage to European taxpayers had climbed into the billions of euros. Germany bore the brunt of it, though similar schemes rippled through Denmark, Belgium, and other European markets.

The trades at the center of this latest case took place in 2008, right in the heart of that window. Prosecutors allege the four defendants played specific roles in facilitating the transactions, though the precise nature of each person’s involvement will be tested at trial.

Commerzbank’s complicated history with Cum-Ex

Commerzbank has been circling this scandal for years. German authorities raided the bank’s offices in both 2017 and 2019 as part of broader Cum-Ex investigations. The bank has maintained that it is cooperating fully with authorities and has positioned itself as a transparent partner in the probes.

In the current proceedings, Commerzbank stated it is not a party to the case. The charges are directed at the four individuals, not the institution.

The Bonn district court secured Germany’s first Cum-Ex criminal conviction in 2020, and cases have continued to wind through the courts since then. Hanno Berger, a German tax lawyer once considered a central architect of Cum-Ex strategies, was convicted and sentenced in 2022 after years of evading prosecution from his refuge in Switzerland.

The €20 million in alleged tax losses from this single case represents a fraction of the total damage attributed to Cum-Ex schemes across Europe. Various estimates have placed the cumulative cost to European treasuries at somewhere north of €55 billion, though precise figures remain contested.

For the four defendants, what comes next is a trial in a German court, where recent Cum-Ex convictions have resulted in prison sentences, not just fines, signaling that German courts view dividend-stripping fraud as serious criminal conduct rather than a regulatory gray area.

The case also highlights the cross-border nature of modern financial crime enforcement. With defendants holding British, German, and American nationalities, and operations spanning London and Frankfurt, the prosecution required coordination across multiple legal systems.