French Authorities Raid Major Banks in Tax Scandal

French prosecutors raided the offices of five major banks on Tuesday in connection with allegations of tax fraud, as reported by MarketWatch. The prosecution confirmed information from an earlier Le Monde publication regarding searches at the offices of HSBC Holdings, Natixis, Societe Generale, BNP Paribas, and Exane (a BNP subsidiary).

Representatives from the German prosecution participated in the investigations. Last month, German law enforcement raided the homes of more than ten HSBC employees as part of a similar investigation.

Authorities suspect the banks of participating in a fraudulent scheme where shareholders transferred shares to other individuals on the date of dividend payment, who had the right to greater reimbursement of dividend tax. The shares were then returned, and the income received was distributed among participants in the scheme.

Shares of SocGen dropped by 2.6% during Tuesday's trading, BNP's shares fell by 1.5%, and HSBC's shares decreased by 0.8%.