Commerzbank inquiry uncovers dividend stripping - Handelsblatt

FRANKFURT (Reuters) - An internal investigation at Commerzbank has uncovered cases of an equity trading strategy known as "cum-ex" or "dividend stripping", German daily Handelsblatt reported, citing financial sources. Dividend stripping involved buying a stock just before losing rights to a dividend, then selling it, taking advantage of a now-closed legal loophole that allowed both buyer and seller to claim tax credits. Handelsblatt said a report by auditing firm PwC had shown that such trades occurred not only at Dresdner Bank before Commerzbank bought it, but also at Commerzbank itself up until 2008. A person familiar with the matter told Reuters the investigation had uncovered individual cases of "cum-ex" trades at Commerzbank but no systematic abuse. Commerzbank, which is more than 15 percent state-owned, told Reuters on Friday it had started late last year a voluntary investigation into cum-ex equity trades since 2003, adding it had pro-actively sent a preliminary report to tax authorities. "There is no final report yet," it said. The Handelsblatt story comes only days after media allegations that banks were using a different tax avoidance scheme called "cum cum" sparked government criticism. (Reporting by Maria Sheahan and Arno Schuetze; editing by Susan Thomas)