KoekiemonsterFinancial trading firms are notoriously secretive, and won’t release any information on their trading activities unless they are forced to do so. The only listed trading firm in Amsterdam, Van der Moolen, had to present their figures on 2008 results today. Apparently the chairman didn’t want to share any information at all, as their results left investors with more questions than answers. And I smell a rat.

Nasty surprise

The operational trading results on 2008 weren’t spectacular at first sight, and provided no details on surviving a year with some horrible events but lots of trading. However, the company had some unexpected nasty surprise ; a EUR 43 million provision for losses on dividend tax.

That’s extremely weird. As a trading firm you’ll often have some stocks in your books during the dividend season. You can reclaim your dividend tax at the authorities. Maybe you won’t get it in some countries, but then it won’t be a surprise as you know the rules.

No regular trading position

Second, large losses are common these days but 43 million is still a lot of money. As it’s only the tax part of dividends, the total received sum of dividend should be around 285 million calculating with a dividend tax of 15%. On average stocks have a dividend of 75 cent, that makes a total share position receiving dividend on around 380 million stocks. That’s a lot. It doesn’t sound as positions you will get during normal option trading. And if you did had this dividend exposure, it would have been a terrible losing position in a year stuffed with dividend cuts.

Only Van der Moolen

Third, no other trading firms have reported any trouble with tax authorities on reclaiming dividend tax. Larger firms like Optiver, IMC and All Options haven’t called the press to complain about the fiscal regime. This little tax thing is clearly only hurting Van der Moolen.

Van der Moolen had an alliance with a company called GSFS, experts in dividend stripping. According to CEO Richard den Drijver this had absolutely nothing to do with it. According to him it’s just a matter of dividend on long stock positions due to, say, short calls.

Not getting away with it

Having trouble with tax authorities in five or six countries and a tax investigation for regular long positions – that sounds unbelievable. Honestly, that sounds almost like some kind of tax fraud. And not getting away with it.