FCA fines ED&F Man for cum-ex trading oversight failings

FCA has fined ED&F Man Capital Markets Ltd £17.2m for serious failings in its oversight of cum-ex trading which allowed it to collect fees to trading strategies that were designed to enable its clients to illegitimately reclaim tax from the Danish authorities.  The failings happened from 2012 to 2015, and it has been established that a Dubai entity within firm’s group participated in a strategy which resulted in £20m of illegitimate reclaims being made.

FCA found that MCM had inadequate compliance checks and failed to ensure the dividend arbitrage trading was legitimate. Its compliance function did not have the necessary expertise to monitor or review the trading, carried out only a high level review of the responsible department and took no steps to understand the trading activities or consider the risks.

Emma Radmore