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US regulator questions banks about dividend-arbitrage trading

Examination focused on a range of industry-wide practices in the dividend-arbitrage space

The US Commodity Futures Trading Commission is examining the role played by a number of large banks in controversial trades that are designed to minimise or avoid taxes, according to people familiar with recent inquiries from the regulator.

The CFTC late last year asked a handful of global banks for information about so-called dividend-arbitrage trades, complex transactions in which banks help clients avoid paying withholding taxes on stock dividends, these people said.

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