“Cum-Ex” affair: Warburg Bank shareholders fail with constitutional complaints

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Hamburg “How-Ex” -Affair

Warburg Bank shareholders fail with constitutional complaints

The Warburg Bank in downtown Hamburg

The Warburg Bank in downtown Hamburg

Source: Bertold Fabricius / Pressebild.de

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In the “Cum-Ex” affair, the Constitutional Court rejected complaints from two shareholders of Warburg Bank who believed that their personal rights had been violated. The reasoning of the court is different for both men.

In the “Cum-Ex” affair of tax evasion, the Federal Constitutional Court dismissed complaints from two shareholders of Warburg Bank. These were not permitted, the court announced on Friday in Karlsruhe (Az .: 2 BvR 1872/21). The two men see their personal rights violated because the Bonn Regional Court and the Federal Court of Justice (BGH) had published rulings on the share transactions. They are also of the opinion that both courts disregarded the presumption of innocence.

The constitutional court made it clear that one of the two main shareholders of the Hamburg bank was not even affected by the anonymized judgments – and therefore not authorized to lodge a constitutional complaint. “A personal concern can not be derived from the fact that his name is” inseparably linked “with the private bank, because this does not change the fact that the challenged judgments contain no statements about his person,” said the court in its communication.

About the second owner of the bank it is said in the grounds of the judgment that he has intentionally and unlawfully committed tax evasion in several cases. For a constitutional complaint, however, a plaintiff has to deal with the previous jurisprudence of the highest German court. That did not happen here because the court denied a violation of the presumption of innocence in a comparable case from 2009. In addition, the plaintiffs should not have applied directly to the Federal Constitutional Court, but rather had to go to specialized courts first.

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The background to this is a ruling by the Federal Court of Justice in July, which made it clear to the highest court for the first time that stock traders, investors and banks have cheated the German tax authorities for billions with opaque “cum-ex” deals and thus made themselves a criminal offense. The case is considered to be one of the biggest tax scandals in German post-war history and is being dealt with politically.

The parties involved had the tax authorities reimbursed capital gains tax, which was never paid, with an ingenious game of confusion. For this purpose, shares with (“cum”) and without (“ex”) dividend entitlements were moved back and forth in large packages around the cut-off date for the distribution in quick succession until no one had an overview. The profits have been split.

The judges largely upheld a decision by the Bonn Regional Court, which in March 2020 had convicted the first defendants across Germany for “cum-ex” share transactions: two ex-stock exchange traders from London. The two plaintiffs now before the Constitutional Court were not charged in this case.

The Hamburg bank had always said that the defendants had acted on their own account. After the BGH ruling, it pointed out that this would remain “without economic effects”. All tax claims were paid in 2020. The private bank MM Warburg had to repay more than 176 million euros.

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