Eric Sarasin, deputy chief executive of Bank J Safra Sarasin, has resigned amid an investigation against him and others concerning share transactions.

(Item originally published 31 October).

Eric Sarasin, deputy chief executive of Bank J Safra Sarasin, has resigned from his post and from the bank’s executive committee amid an investigation against him and others concerning share transactions allegedly done to avoid tax, breaching German law.

In late October, this publication reported that Swiss authorities have searched the bank’s premises in Switzerland as part of a probe into what are called cum-ex share deals. A search of premises in Basel and Zurich was made on 23 October, following a request for assistance by German authorities. Cum-ex deals are also known as dividend stripping.

“Over recent days, the media has widely reported the ramifications of legal investigations initiated in Germany against a number of people, including Mr Eric Sarasin. Investigations on behalf of German prosecutors have been carried out in Switzerland. Eric Sarasin categorically denies the accusations made against him and wants to be free and available to organise his own defence,” a statement from Bank J Sarasin said today.

Dividend stripping relates to when shares are sold just before a dividend payment is made and then bought back after the payment to avoid paying tax on the dividend and has been banned in Germany since 2012.

The bank added: “The bank has accepted his resignation with regret and thanks Mr Eric Sarasin for all his efforts and achievements over many years of collaboration.”

Bank J Sarasin has told this publication that the probe was related to a legacy issue from the time the bank was owned by Rabobank. “Bank J Safra Sarasin was not and is not involved in the set up or the processing of such cum-ex transactions, as the funds under investigation were established and operated by a third party, not by the bank,” the bank said in a statement to this publication on 26 October.

Middle East

In a separate issue, a report by Reuters said that Bank Sarasin and its Middle East unit must pay $10.45 million to members of Kuwait's wealthy Khorafi family after the financial institutions were found to have mis-sold $200 million of investment products, a Dubai court has ruled.

The Dubai International Financial Centre's Court of First Instance decided upon the compensation this week.  This follows a court ruling in August against Bank Sarasin and its subsidiary, which has now awarded compensation of $10.45 million to three Khorafi family members. The claimants had been asking for more than $26.5 million, the report said.

The report said Bank Sarasin had denied that it broke any regulation or failed to meet any obligation, and had said in August it was considering an appeal against the initial ruling. In the August ruling, Sarasin and its Middle Eastern subsidiary Sarasin-Alpen (ME) Ltd was found to have sold unsuitable real estate-related investments to Khorafi family members in 2007 and 2008, the report said.