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    TLPR   JE00BMDZN391

TP ICAP GROUP PLC

(TLPR)
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Delayed Quote. Delayed London Stock Exchange - 01/25 11:35:12 am
143.4 GBX   +3.91%
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TP ICAP Sues Nex Over Failure to Disclose Probes Into Swaps, 'Cum-Ex' Trading -- Financial News

11/16/2020 | 10:24am EST

By James Booth

Of Financial News

TP ICAP PLC is suing rival broker Nex after accusing it of failing to disclose major regulatory investigations the company faced at the time of TP ICAP's 2016 acquisition of Nex's voice trading business.

Tullett Prebon bought ICAP's telephone-broking business in 2016 for 1.3 billion pounds ($1.72 billion) creating TP ICAP.

City grandee Michael Spencer sold the renamed company Nex to U.S. futures giant CME Group Inc. in 2018 for GBP3.9 billion.

TP ICAP has now filed a High Court claim against Nex, saying the company breached deal warranties by not disclosing a joint U.S.-U.K. regulatory investigation into swap trades and its potential exposure to the German cum-ex tax scandal.

TP ICAP is asking for an indemnity against any regulatory fines, civil claims and associated costs arising from the two matters, which already run into the tens of millions of pounds.

The claim, dated Oct. 22, said representatives of ICAP Global Derivatives notified the Financial Conduct Authority and the U.S. Commodities and Futures Trading Commission in August 2015 about swaps transactions that were handled by IGDL on behalf of an overseas bank.

The claim said that TP ICAP thought "regulatory interest" in the swaps trade was continuing. The company said it had incurred $9.5 million in costs dealing with the matter so far.

It said similar investigations against other companies had led to hefty fines, with Cooperatieve Centrale Raiffeisen-Boerenleenbank fined $475 million by the CFTC in 2013 and Lloyds Banking Group PLC fined $105 million by the CFTC in 2014 in relation to interest-rates and swaps trading misconduct.

TP ICAP has also accused Nex of not telling it about potential exposure to the cum-ex scandal in Germany, which cost European exchequers an estimated 55 billion euros ($65.11 billion).

Cum-ex trading, or dividend stripping, involves trading listed equities around their dividend date so that more than one party can claim withholding tax reclaim certificates or withholding tax reclaims.

Cum-ex trading has led to controversy in Germany and other European countries including Denmark, with multiple banks, law firms and accountancy firms facing investigations for their role in the practice, which authorities say undermines the integrity of the financial system.

TP ICAP said it was aware of investigations by the German Federal Tax Office, the Public Prosecutor of Frankfurt, and the Public Prosecutor of Cologne into its involvement in cum-ex trading. It also said it was aware of a number of potential civil claims that it could face.

The company said the investigations and other claims have the potential to result in "very substantial" payouts of fines, penalties or other liabilities.

A TP ICAP spokesperson said: "TP ICAP can confirm it has issued a claim case against Nex Group Ltd. in the High Court in regard to investigations by governmental authorities concerning a number of matters, including alleged 'cum-ex' trades in Germany."

"These trades, which are being investigated by several German authorities, occurred some years before Tullett Prebon acquired the voice broking business of ICAP on 30 December 2016."

"The existence of the alleged 'cum-ex' trades and the regulatory enquiries in Germany were not disclosed to Tullett Prebon during the sale process of the ICAP voice business."

CME declined to comment.

Website: www.fnlondon.com

(END) Dow Jones Newswires

11-16-20 1023ET

Stocks mentioned in the article
ChangeLast1st jan.
CME GROUP INC. -0.65% 222.84 Delayed Quote.-1.84%
LLOYDS BANKING GROUP PLC 3.69% 51.09 Delayed Quote.3.08%
RAIFFEISEN BANK INTERNATIONAL AG 3.81% 23.98 Delayed Quote.-10.74%
TP ICAP GROUP PLC 3.91% 143.4 Delayed Quote.-9.63%
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Sales 2021 1 877 M 2 535 M 2 535 M
Net income 2021 38,0 M 51,3 M 51,3 M
Net Debt 2021 106 M 143 M 143 M
P/E ratio 2021 31,6x
Yield 2021 6,78%
Capitalization 1 131 M 1 526 M 1 527 M
EV / Sales 2021 0,66x
EV / Sales 2022 0,68x
Nbr of Employees 4 932
Free-Float -
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Number of Analysts 9
Last Close Price 138,00 GBX
Average target price 265,79 GBX
Spread / Average Target 92,6%
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Nicolas Noel Andre Breteau Chief Executive Officer & Director
Robin Stewart Chief Financial Officer & Director
Richard David Antony Berliand Chairman
Martin Ryan Group Chief Operating Officer
Edmund Ng Independent Non-Executive Director
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