Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

Abuse of Structured Financial Products: Misusing Basket Options to Avoid Taxes and Leverage Limits

Posted by William Byrnes on July 22, 2014


d54fa-6a00d8341bfae553ef01a3fd36986c970b-piTwo global banks, Deutsche Bank and Barclays Bank, and more than a dozen hedge funds, such as RenTec, misused a complex financial structure to claim billions of dollars in unjustified tax savings and to avoid leverage limits that protect the financial system from risky debt, a Senate Subcommittee investigation has concluded.  The improper use of this structured financial product, known as basket options, is the subject of a 93-page report and 5 hours of testimony.

Please see the story and links to releavnt document and recorded webcast http://lawprofessors.typepad.com/intfinlaw/2014/07/hedge-funds-using-basket-options-to-recharacterize-income-as-long-term-capital-gain-bypass-leverage-.html

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