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MM Warburg seeks damages from Deutsche Bank in 'cum-ex' affair

Germany-based private bank M.M.Warburg & CO Gruppe GmbH has filed a damages claim against Deutsche Bank AG over missed capital gain tax payments in the years 2010 and 2011.

The private bank seeks the repayment of €46 million in taxes including interest, it said Jan. 10. The claim is linked to illegal cum-ex trades German authorities have alleged M.M. Warburg had conducted between 2007 and 2011. Under the so-called cum-ex practice, a bank, on a temporary basis, takes over shares that are owned by foreign investors right before a dividend is paid on them to claim tax breaks, which are given only to Germany-based shareholders.

German authorities investigated M.M. Warburg in connection with cum-ex trades after a raid at its offices in early 2016. In March 2018, there was another raid at the bank's premises and private lodgings of the employees involved in the case. M.M. Warburg said it rejects any involvement in the suspected cum-ex trades, saying Deutsche Bank as its deposit bank in Germany was responsible for tax payments to foreign clients.

A recent series of internal audits at Deutsche Bank found that management and traders may have discussed the reputational risk of issuing withholding tax certificates at the center of a "cum-ex" share trading scheme, Reuters reported Jan. 4.