UK Regulator FCA fines Mako £1.66M over £92B cum-ex trades
FSA completes series of investigations into сum-ex
The UK Financial Conduct Authority (FCA) has fined Mako Financial Markets Partnership LLP (Mako) £1,662,700, concluding a series of enforcement actions related to cum-ex trading.
As stated on the FCA website, cum-ex refers to trading shares on or just before the ex-dividend date. In certain jurisdictions, these transactions can enable traders to claim tax refunds on withheld tax, sometimes without actual entitlement.
The goal of dividend arbitrage trading (such as cum-ex) is to position shares in alternative tax jurisdictions around dividend dates to minimize withholding tax or secure tax refunds. This may involve various trading operations, including securities lending, trading, and derivatives transactions designed to hedge price fluctuations around dividend dates.
Serial tax evasion
Between December 2013 and November 2015, Mako executed alleged over-the-counter equity trades on behalf of Solo Group clients worth approximately £68.6 billion in Danish stocks and £23.6 billion in Belgian stocks. Mako earned around £1.45 million in commissions from these transactions.
The £1.66 million fine was imposed on the grounds that Mako "failed to adequately apply the policies and procedures it had in place." Additionally, the firm breached multiple FCA principles, particularly failing to conduct business "with due skill, care, and diligence."
The enforcement decision against Mako Financial Markets marks the FCA’s eighth and final ruling in a series of cum-ex-related cases since 2021.
As we wrote, the Financial Conduct Authority (FCA) has issued stark warnings to the public about unlicensed forex brokers operating without regulatory approval.
