Improper securities transactions and asset management
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Securities – An investment with opportunities and risks

Do you want to invest your assets profitably? Securities are financial instruments that represent a specific asset. These include stocks, certificates, bonds, funds and ETFs (Exchange Traded Funds). In general, the higher the risk of investing in securities, the greater the potential returns. A lower risk, on the other hand, leads to a lower return. Unfortunately, investment advisors and information materials often provide incomplete or incorrect information about risks and profit potential in order to generate higher commissions, which can lead to significant losses for investors. In such cases, you may be entitled to compensation under advisor or prospectus liability.

Are you invested in a closed-end fund and is the insolvency administrator or the fund company demanding the return of distributions? Have your legal situation checked, as not all claims for repayment are justified.

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reclaim of distributions

In the case of poorly performing closed-end funds that are on the verge of insolvency, fund companies often demand that investors return distributions that have already been made. In such cases, affected investors receive an "offer" to release themselves from liability through a so-called "voluntary reinvestment".

If you reject this offer, the fund company may take legal action against you under the German Commercial Code (HGB), which means that it may try to demand repayments or additional payments from you.

Most closed-end funds are public companies in the legal form of a GmbH & Co. KG. A limited partnership (KG) is a partnership that includes at least one general partner with unlimited liability and one limited partner with limited liability.

Investors are generally liable for the amount of their deposit, i.e. the amount they have invested in the fund. If you have paid your deposit in full, the maximum amount you can lose is this amount.

Before the distributions can be reclaimed, however, it must be clarified who is making the reclaim. In many cases, it is advisable to have the case examined individually by a lawyer, as insolvency administrators, fund companies or creditors are not always entitled to reclaim the money.

If you have already made a voluntary reinvestment or other form of repayment of distributions, you may be able to reclaim those amounts if the reclaim was unjustified.

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prospectus liability

Prospectuses play a central role in the investment business, as they provide an essential basis for investors' decisions. They contain important information about the investment on offer and the associated risks, which are essential for making an informed investment decision.

Prospectus liability includes the legally established joint and several liability of those responsible for the prospectus for false or incorrect information that is relevant to the assessment of the investment offered for sale. This liability protects investors from wrong decisions made on the basis of incomplete or incorrect information.

Prospectus managers can be various parties who are responsible for the preparation and publication of the prospectus. These include founders, initiators, backers, guarantors of the prospectus and also trustees. These persons or institutions are jointly liable for the accuracy of the information provided in the prospectus.

Typical brochure errors: Errors in brochures can occur in various areas:

Incorrect forecasts
Errors in the Articles of Association
Incorrect information about the character and subject matter of the property
Incorrect information on safety and profitability
Incorrect information on the risk of total loss
Major innovations and use of funds

Relevant time: The decisive point in time for assessing a prospectus error is generally the time of the investment decision. The overall impression of the prospectus also plays a role.

claim for damages: If you as an investor have suffered financial loss due to incorrect or missing information in the sales prospectus, the issuer must pay compensation. The compensation should aim to unwind the investment and put the investor in the same position as he was before subscribing.

Incorrect investment advice

Financial products are often offered as part of an investment advisory contract. Customers often sign contracts for investment products whose content they do not fully know. They usually rely on the accuracy of the prospectus and the assessment of their investment advisor.

Investment advice is deemed to be incorrect if the advisor has not properly fulfilled his or her duty to provide information and advice. In such cases, advisory liability applies, which enables the investor to assert claims for damages.

A good investment advisor should ask the investor about their investment goals, the desired investment period (long-term or short-term) and their retirement planning. Important components of sound advice also include information about the provider's creditworthiness and performance record as well as any negative press reports.

The prospectus for a financial product should be given to the customer in a timely manner and without pressure so that he or she can form an independent opinion. The investor has the right to examine the prospectus and obtain sufficient information before signing the contract.

If you have suffered damage due to incorrect advice, you are entitled to compensation from the investment advisor. This usually means that you can get your original investment amount back. The amounts that can be refunded also include incidental costs such as premiums or account opening fees.

In addition, you can also claim compensation for lost interest, as you might have earned interest with another, profitable investment. This reimbursement is also part of the claim for damages.