Reuters reports that Renaissance Technologies, a hedge fund, defended the so-called basket options it used, saying at a hearing of the Senate Permanent Subcommittee for Investigations that they served legitimate business purposes.
The hearing follows the publication of a study this week by Senator Carl Levin, the Michigan Democrat who heads the panel, which said the two banks helped Renaissance and other hedge funds to avoid billions of dollars in taxes.
'Renaissance ... purchased (basket) options ... for substantial non-tax business reasons', Renaissance Capital Chief Financial Officer Mark Silber said. 'We would have purchased these options regardless of their tax treatment'.
The two banks enabled at least 13 hedge funds to conduct $100bn in securities trades, Levin's report found. Deutsche sold the products to 13 hedge funds, while Barclays had only Renaissance as a client.
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