Nailesh Teraiya has referred his Decision Notice to the Upper Tribunal. Any findings in the Decision Notice are therefore provisional and reflect the FCA’s belief as to what occurred and how it considers his behaviour should be characterised.
On 25 March 2025, the FCA notified the Upper Tribunal that it was no longer seeking a financial penalty against Mr Teraiya. The FCA reached this decision following a request from the Danish Tax Authority. The Danish Tax Authority has stated that if the FCA pursues a financial penalty, its civil proceedings against Mr Teraiya and others to recover their losses could be prejudiced. The Upper Tribunal consented on 30 July 2025. The FCA maintains its case in the Upper Tribunal on Mr Teraiya’s ban from financial services.
The FCA has decided to fine Mr Teraiya, formerly the sole controller and chief executive of Indigo Global Partners Limited (’Indigo’), £5.95 million and ban him from carrying out any regulated activity.
The FCA has found that Mr Teraiya was responsible for Indigo’s participation in a sham trading scheme which obtained “repayment” of €91.2 million from the Danish tax authority, SKAT. In reality, this was not a repayment of tax as the claim related to shares that did not exist, no dividends had been paid and no tax had been deducted.
The FCA has also found that, in addition to £326,000 received through Indigo, Mr Teraiya received more than £5.1 million through third parties in return for his part in the scheme. The fine that the FCA has decided to impose seeks to deprive Mr Teraiya of the financial benefit he has received from his involvement in this scheme.
The claims to SKAT were made using hundreds of false and misleading documents produced by Indigo. These documents falsely certified that clients of Indigo owned large numbers of shares, that dividends had been paid on these shares and that tax had been withheld on these dividends on behalf of the Danish tax authorities. The FCA has found that Mr Teraiya knew that the documents were false and misleading and that they were used to support “reclaims” of tax which had never actually been paid.
The FCA considers that by participating in this sham trading scheme and deliberately misleading the FCA, including by concealing the extent he had personally profited from the trading, Mr Teraiya acted dishonestly and with a lack of integrity.
Therese Chambers, joint Executive Director of Enforcement and Market Oversight at the FCA, said:
‘As Chief Executive of Indigo and an experienced industry professional, Mr Teraiya knew that these were fake trades, supported by fake documents. He acted dishonestly and personally benefitted to the tune of more than £5 million for his part in this scheme. There is no place for such conduct in UK markets.
This is a clear example of the action we take against individuals who abuse their position for personal gain and damage the integrity of the UK’s financial system.’
This is the sixth case brought by the FCA in relation to cum-ex trading, with fines for the practice now totalling nearly £22.5 million. This work has been facilitated by the extensive engagement between the FCA and global law enforcement authorities.
Notes to editors
- Read the Decision Notice for Mr Teraiya[1].
- Mr Teraiya breached Principle 1 of the Statements of Principle for Approved Persons[2] which states that “An approved person must act with integrity in carrying out his accountable functions”. Mr Teraiya’s conduct as set out in the Decision Notice was dishonest and lacked integrity.
- Indigo Global Partners Limited was formerly known as Indigo Securities Limited, and is in creditor’s voluntary liquidation. Liquidators were appointed on 20 October 2021.
- The FCA have completed a number of cum-ex cases May 2021[3], November 2021[4], July 2022[5], July 2023[6] and June 2023[7] involving illegitimate claims against the Danish Exchequer and other investigations are continuing.
- The intention of dividend arbitrage trading (of which cum-ex is an example) is to place shares in alternative tax jurisdictions around dividend dates, with the aim of minimising withholding tax or generating withholding tax reclaims. This may involve several different trading activities including trading and lending securities and trading derivatives, including futures and total return swaps, designed to hedge movements in the price of the securities over the dividend dates.
- Withholding tax (WHT) is a levy deducted at source from income and passed to the government by the entity paying it. Many securities pay periodic income in the form of dividends or interest, and local tax regulations often impose a withholding tax on such income. In certain cases where WHT is levied on payments to a foreign entity it may be reclaimed if there is a formal treaty, called a double taxation agreement (DTA), between the country in which the income is paid and the country of residence of the recipient. DTAs allow for a reduction or rebate of the applicable WHT.
- The FCA publication of Market Watch 52[8] highlighted various issues and concerns around dividend arbitrage in 2017. FCA contributed to the European Securities and Markets Authority (ESMA) Final Report on Cum-Ex, Cum-Cum and WHT in 2020.
- Find out more information about the Upper Tribunal[9] (Tax and Chancery Chamber).