Wednesday, July 18, 2007

Citigroup, Lehman receive I.R.S. requests - WSJ

(Reuters) - At issue, the Journal said, are derivatives trades where
securities firms buy stocks from offshore hedge-fund clients,
and in return pay them the return of the stocks and any
dividends they generate.




If a $10 stock rises to $11 and pays a dividend of 15
cents, the securities firm pays the hedge fund $1.15,
representing the appreciation and the dividend, minus a small
fee. The trade could save the hedge fund from paying as much as
30 percent in taxes on the dividend, depending on the venue,
because the fund technically does not hold the stock, the
Journal said.


Read more at Reuters.com Government Filings News

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