"FCA Fines Bastion Capital London Ltd for Facilitating Fraudulent Cum-Ex Trading"

The FCA has issued a fine of £2,452,700 to Bastion Capital London Limited (in liquidation) for serious financial crime control failings regarding cum-ex trading. Between January 2014 and September 2015, the firm executed trades worth approximately £49bn in Danish equities and £22.5bn in Belgian equities on behalf of Solo Group clients. The Commission believes that these trades were intended to allow the arranging of withholding tax reclaims from Denmark and Belgium without paying taxes, thereby allowing clients to benefit from stolen money. Bastion then received a commission of £1.55m for these trades, which constituted a significant portion of their revenue in this period. Additionally, Bastion undertook a series of transactions on four separate days that resulted in a €22.7m profit for 10 out of 11 solo clients arranged by the Solo Group’s controller at the expense of the one other client. The FCA believes that Bastion ignored or failed to notice a series of red flags that should have alerted them to the risk of being used for financial crime. Steve Smart, Joint Executive Director of Enforcement and Market Oversight, commented that “Firms need to properly manage [financial crime risks]”. This is the fifth case brought forth by the FCA in relation to cum-ex trading and other dividend arbitrage cases and WHT schemes and marks a 30% discount on Bastion's fine under the FCA's Settlement Discount Scheme.