The cum-ex scam stole $60b from European tax authorities: it's monumentally boring, complicated, and very, very important

Cum-ex (previously) is a technical, boring financial engineering technique that lets fraudsters file multiple tax-refund claims for the same stock transactions (they called it "dividend arbitrage"); from 2006-2011, the EU's largest, most respectable banks, law firms, and investors used the scam to steal $60,000,000,000.

Cum-ex is the kind of scam that the finance sector excels at: a socially useless financial engineering marvel that makes staggeringly rich people much richer, protected by a thicket of dull, deliberately complexified terminology and tactics that exist solely to obfuscate the obvious fraud underway.

A few bankers have gone on trial for criminal fraud for their role in cum-ex, but so far most of the perpetrators have gotten away with it, keeping the money (one trader, Sanjay Shah, relocated from London to Dubai and bought a $1.3m yacht he calls the Cum-Ex).

But German prosecutors have embarked on an aggressive program of prosecutions for everyone who profited from cum-ex, including the prominent lawyers who wrote legal opinions arguing that cum-ex was legal. They are launching 400 prosecutions stemming from 56 investigations. Among those is Hanno Berger, a former German state tax auditor who switched sides and became a key player in the theft.

Berger is a revered European finance law scholar, and his work was key to conferring a halo of lawfulness to the otherwise obvious scam. In private, Berger was more frank. One of the lawyers who worked with him says that he told the lawyers he supervised that they should quit if they didn't have the stomach for raiding the German state's coffers: "Whoever has a problem with the fact that because of our work there are fewer kindergartens being built, heres the door." Read the rest