Capital Markets Law
Given the important role that capital investments play in corporate financing and private wealth accumulation, private and institutional investors should react immediately if there are indications that a capital investment is in danger of failing or funds are no longer being paid out on time. Our lawyers with experience in the field of capital markets law can help you protect yourself from financial loss.
Collapsing share prices, direct investment payments that fail to materialize, and closed-end funds facing tough times are reasons why institutional and private investors regularly suffer substantial financial losses in the capital markets. But the money does not have to be lost for good. There are various approaches to recovering the money and asserting claims for damages. Grounds for filing damages claims can include violations of Germany’s Securities Trading Act, prospectus errors, bad advice, and, of course, investment fraud.
If there are signs that an investment is in crisis and the agreed returns or repayments are not being made on time, investors should not await further developments but instead act immediately to avoid further financial losses. In the event that a capital investment fails, e.g., due to issuer insolvency, this can lead to substantial financial losses for companies as well as private investors.
That is why it is essential to obtain comprehensive legal advice in good time, including with respect to limitation periods. Thanks to our legal team’s extensive experience dealing with capital markets law and other related fields such as banking law, tax law, and insolvency law, we are able to develop solutions to secure your investment and minimize losses.
Violations of Germany’s Securities Trading Act
Listed companies and issuers that have applied or received permission for their financial products to be traded on a regulated market or multilateral trading facility (MTF) in a member state are subject to the ad hoc disclosure obligation, i.e., they are required pursuant to Section 15 of the German Securities Trading Act (Wertpapierhandelsgesetz, WpHG) to immediately publish insider information that has the potential to influence the share price. If the publication of this information is delayed, or the information is incomplete or contains inaccuracies, investors may be entitled to claim damages.
Claims for damages against auditors
Investors rely on various sources before deciding to make a capital investment. An auditor's certificate, for instance, can secure their confidence in an investment. Indeed, a court order issued by the Higher Regional Court of Munich on December 9, 2021 confirmed that there is a causal link between certificates issued by auditors and investment decisions. And yet the Wirecard scandal, among others, has clearly demonstrated that auditors' certificates cannot be blindly trusted. If the auditors have not taken their auditing duties seriously enough and failed to exercise the necessary care, investors and shareholders may be entitled to damages.
Damages arising from prospectus liability
For most capital investments, issuers are required to submit an issue prospectus. These are meant to enable investors to form an accurate picture of the investment and its associated risks and rewards. It is for this reason that Germany’s Federal Supreme Court (BGH) has ruled that the prospectuses must provide information on all aspects that may be of material importance to an investment decision. This means that the prospectus must, for example, also provide complete and accurate information about the risks of an investment. However, the frequent failure to meet these requirements often gives rise to investor claims for damages. Our lawyers can sniff out prospectus errors that will then form the basis of your claim.
Damages due to bad advice
The obligation to properly inform about the risks of an investment also applies to investment advisors. They must address all information that is relevant to the investment decision. If the advisor fails to provide advice that is appropriate for the investor and the investment, they may be liable for damages.
Our lawyers can take a closer look at contracts and asset management, asking important questions: Has the asset manager gone against investment guidelines? How can we prove that they have gouged fees? Or have they allowed themselves to be rewarded with hidden commissions from banks and fund companies? If any of these questions is relevant to your case, one of our lawyers would be more than happy to assist you in pursuing all legal avenues to enforce your claims for damages against the asset manager.
Private investors who have taken a stake in capital investments, such as closed-end funds, as a closed group of investors within the framework of a partnership organized under the German Civil Code (BGB) or a limited partnership (KG) have certain rights and obligations in relation to the capital investment as co-owners. They share in the profits, but also in the losses. If the investment fails and anticipated returns turn into losses, this raises a number of legal questions: Who is responsible for the losses? Who can be held liable and how can investors enforce their claims for damages? Our lawyers with experience in the field of capital markets law can answer these questions and enforce your claims on your behalf.