BlackRock investigated for fraud in Germany
FRANKFURT: Prosecutors searched the Munich offices of BlackRock this week, a person with knowledge of the matter said, as part of the country’s largest postwar fraud investigation.
The practice being investigated, known as cumex, typically involved trading company shares rapidly around a syndicate of banks, investors and hedge funds to create the impression of numerous owners, each of whom was entitled to a tax rebate.
A BlackRock spokesman said the world’s biggest fund manager was ‘‘fully cooperating with an ongoing investigation relating to cumex transactions in the period 20072011’’.
BlackRock’s inclusion is significant because it oversees more than $US6.4 trillion ($NZ9.4 trillion) in assets, including company shares which it lends to banks as part of its business.
BlackRock’s chairman in Germany, Friedrich Merz, who has helped secure its influence in Europe’s industrial powerhouse, took his current role in 2016 — after the period being investigated — and has condemned illicit dividend stripping.
Merz has taken an early lead in the race to succeed Angela Merkel as leader of Germany’s Christian Democrats and secure the chance of running for chancellor as soon as next year. — Reuters