Jas Bains, a former lawyer at Solo Capital, a hedge fund involved in cum-ex trading, alerted Danish authorities to a tax scam. Despite his whistleblowing efforts, Bains became a defendant in a £1.4 billion civil lawsuit initiated by the Danish tax authority (SKAT). The case, which concluded after eight years, saw SKAT fail to establish liability against Bains and other defendants for the alleged losses. Separately, Solo Capital founder Sanjay Shah was convicted in Denmark for his role in the cum-ex scheme.
Background on the Cum-Ex Scheme
The cum-ex trade, a complex financial transaction, originated around 2009. It involved the sale of shares immediately before a dividend payment (cum-dividend) but delivered afterward (ex-dividend). This strategy exploited delays in processing share sales, creating ambiguity over share ownership at the time of dividend payment. This allowed multiple parties to claim rebates on withholding tax that had only been paid once. The practice led to significant financial losses for taxpayers across Europe, initially gaining traction in Germany before spreading to countries including France, Belgium, Italy, and Austria.
Solo Capital's Involvement and Jas Bains' Role
Sanjay Shah established Solo Capital, a London-based hedge fund with offices in Dubai, in 2009. The firm became part of a network implicated in cum-ex trades, specifically targeting Denmark from 2013 onwards. Jas Bains joined Solo Capital in 2010 as head lawyer and later managed the London office.
By mid-2014, Bains left Solo Capital. He subsequently became aware of the escalating scale of cum-ex transactions involving Denmark. Information indicated that Sanjay Shah's trades from Denmark generated approximately €100 million in 2013 and nearly €250 million in 2014, with projections for €1 billion in 2015.
Whistleblowing and Legal Proceedings
In 2015, Bains contacted a Danish lawyer, which led to his engagement with Danish police. He assisted authorities for two and a half years in understanding the mechanics of the cum-ex scam. Danish prosecutors did not pursue charges against Bains, instead focusing on Sanjay Shah.
Sanjay Shah, 54, was extradited from Dubai and, in December last year, received a 12-year jail sentence in Denmark for fraud, marking the heaviest penalty for a fraud case in the country's history. He is currently appealing the conviction.
Concurrently, the Danish tax authority pursued a £1.4 billion civil lawsuit in the UK against a large group of defendants, including Jas Bains. This case, one of the highest-value civil cases heard in the UK, concluded after eight years. The Danish tax authority's attempt to hold the defendants, including Bains, liable for the alleged losses was unsuccessful. Jas Bains has stated that he is currently jobless and has lost a significant portion of his wealth due to the legal battles.