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In brief

On Wednesday, 24 February 2021, the Financial Conduct Authority was ordered to halt its investigation into a trader involved in the European Cum-Ex dividend scandal pending the outcome of the separate case brought by the Danish tax authorities in the UK.

Judge Jonathan Swift said in his ruling (available here) that the FCA must stop its disciplinary investigation into the trader until the Danish tax authorities’ High Court case first resolves a number of legal issues, which is expected to be around the beginning of 2022.


The FCA’s investigation was opened in 2015 on the back of information provided by the Danish tax authority (SKAT). A warning notice was issued by the FCA against the (anonymous) trader in June 2020.

SKAT has separately brought five claims against around 100 defendants in a complex set of proceedings. SKAT has claimed damages equivalent to GBP 1.3 billion alleging that the defendants operated a fraudulent scheme that resulted in SKAT issuing billions of pounds worth of wrongful tax rebates.

The judge held that the legal issues of the FCA probe were closely tied to the ongoing SKAT claims and would “be of particular assistance” to the FCA’s investigation, particularly whether the alleged fraudulent scheme was in fact consistent with market practice. He held that absent a stay to the FCA investigation, there was a “real risk of serious prejudice” to the extent that the trader would be unable to meet the legal costs of both the FCA investigation and SKAT’s claim at the same time. This risk of prejudice to the trader outweighed the public’s interest in a swift investigation, in the judge’s view.

On the last point, Judge Swift also questioned the FCA’s commitment to the investigation, concluding from the fact that the FCA had only issued a warning notice to the trader five years after the investigation was opened that it was probably not “one of the FCA’s high priorities.”

In a statement following the decision, the FCA said whilst permission to appeal was refused by Judge Swift, they would seek permission to appeal from the Court of Appeal.

Key takeaways

Denmark along with Germany, Italy and France are among the countries most affected by the Cum-Ex tax scheme. Although many of the individuals involved in the scheme were UK nationals and much of the trading will have taken place in the City of London, the FCA have yet to progress with enforcement in the UK. They have however indicated that they are progressing with enforcement cases relating to international dividend arbitrage trading schemes so we should definitely watch this space. This decision certainly puts the brakes on their progress.


Jonathan chairs the firm's Financial Institutions Global Industry Group and is a partner in the London Dispute Resolution practice. Jonathan has deep experience in advising boards, executive teams and individuals dealing with issues of market integrity, ethics, brand and reputation impact, conduct risk, whistleblowing, market misconduct, systems and controls failings and remediation, public statements and investor relations, financial crime, fraud, regulatory investigation and enforcement, public policy, public law and civil and criminal litigation. Jonathan's substantial in-house experience delivers a highly strategic and commercial focus aimed at re-establishing confidence in the brand and individuals. Jonathan joined Baker McKenzie from Barclays Bank PLC. Spanning a decade of unique pressure in the financial sector amidst the global financial crisis, he led the global litigation, investigations and enforcement function and established the bank's financial crime legal team. Jonathan was responsible for a series of high-profile regulatory and criminal investigations in EMEA, the US and Asia Pacific regions and led a significant portfolio of wholesale and retail litigation. Supporting the bank's risk and compliance functions, he implemented and improved systems and controls in respect of money laundering, bribery and corruption, fraud and international sanctions. Jonathan worked with UK and US law enforcement and government intelligence agencies on counter-terrorism, organised crime and other domestic and international security initiatives. Jonathan is the contributing author to a number of leading legal and sector publications, including: Banks and Financial Crime: International Law of Tainted Money (Oxford University Press 2008, 2016); Global Investigations Review - The Evolution of Risk Management in Global Investigations (GIR 2016, 2017, 2018); and's annual Top 10 Operational Risks (2018-2022).