(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 Business News
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 Business News
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