The case

On 22 May 2017 the district of court of Ulm sentenced private bank J. Safra Sarasin to pay a compensation of € 44.8 m to the German Erwin Müller. The text of the court decision (LG Ulm 22.05.2017 – 4 O 66/13) has not been published yet.
A legal loophole is not a sound basis to increase one’s profits in the cross-border business, which was shown most clearly to private bank J. Safra Sarasin, sentenced by the district court of Ulm in a civil case to pay Erwin Müller a compensation of € 44.8 m plus interest and attorney’s fees. J. Safra Sarasin is thinking about an appeal.
Between 2002 and 2012 J. Safra Sarasin’s predecessor bank, Basler Privatbank Sarasin, had used a legal loophole in Germany in order to win over wealthy German private clients, among them Müller and AWD founder Carsten Maschmeyer, for so-called Cum-Ex-Investments that were structured in such a way so that more than one party could claim refund of the profit tax (comparable with the Swiss withholding tax) even though it had only been paid to the tax authorities once. This system of a miraculous multiplication of money was legally controversial and was stopped when the Federal Central Tax Office blocked the refund of paid-in profit taxes and Müller and the kind began to fear for their money.

Source: Reuters

The commentary

The court criticizing private bank Sarasin’s practices is one thing, but the court’s way of presenting billionaire Müller as a helpless investor in need of protection is yet another thing. Whether or not one can compare the entrepreneur with the proverbial layman who has no idea about finances and pays a few Euros into a bank account for his grandson can be disputed. One is more inclined to see Müller as crafty investor well capable of assessing the risks inherent in an investment. This way of viewing things may be one of the lines of argument in a possible appeal.
Note: There is important information from “Bundesfinanzministerium” (published on 17 July 2017), link; see Deloitte’s commentaries: Link

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