Bank J. Safra Sarasin has given up in the fight with a former client about losses incurred through cum-ex investments. It will probably pay him some 45 million euros in compensation.
Erwin Mueller, the German founder of the Mueller drugstore chain, suffered a near-complete loss on an investment in cum-ex-funds issued by what used to be Sarasin private bank – today J. Safra Sarasin. He filed for compensation of some 45 million euros ($51 million).
Safra Sarasin has now decided to give up its fight against the claim, according to a report by «Handelsblatt». The bank will not appeal the verdict of a Stuttgart-based court and give back the money to the former client.
Tax Loophole
The bank has struggled for a long time against the defeat and Mueller, now 86, had to go through seven trials and verdicts to get back the investment. The bank should have informed him better about the risks involved in the cum-ex-product.
The case was the trigger for the much wider scandal that rocked Germany’s financial market, prompted searches by the police and led to the departure of Eric Sarasin, the former deputy head of the bank.
Of course, the billionaire wasn’t just another naïve investor lured into buying a risky product. He had bought funds in 2010 already and got himself a legal expertise about his investment.
Tax Scam
The cum-ex-investments have become known as one of the biggest tax scams ever, but the loopholes have been known for years and used by bankers and lawyers alike to save money.
When the German state closed the loophole in 2012, several prominent clients of Sarasin lost their money.
