The raids relate to a dividend arbitrage strategy known as Cum-Cum where shareholders transferred stock for a short period to investors based abroad to avoid a dividend tax. Investors held the shares during the period when dividends were paid out and either weren’t taxed or taxes were refunded. They then sold the securities back to the original owner and the amount saved was split between the parties.
French banks including Societe Generale SA and BNP Paribas SA face collective fines of more than 1 billion euros ($1.43 billion) as part of a probe into tax fraud and money laundering related to dividend payments.
HSBC Holdings Plc, Natixis SA and BNP’s Exane unit are also part of the investigation, according to the prosecutor's office in Paris, which said that the fines include penalties and back interest. Preliminary investigations related to the raids were opened in December 2021, the prosecutor said.
