Controlling und Vertriebsrecht: Immer größere VSH-Lücken im Bereich geschlossener Fonds und Beteiligungen*

Controlling and distribution law: Increasingly large VSH gaps in the area of closed-end funds and participations*. (Louis Armstrong, American jazz musician, 1900 – 1971)

The VSH broker Ralf W. Barth has long recognized ( that with the increasing legal regulation of the intermediary market (EU-VRL, MiFID, VVG reform, etc.) a clear limiting trend in the field of pecuniary loss liability can be observed.

In practice, there are often considerable coverage gaps in the VSH policies of intermediaries!
VSH coverage gaps are growing: More and more insurers are (understandably) turning away from the hardly transparent products and concepts by no longer offering VSH coverage for these products. While years ago it was still possible without any problems to include entrepreneurial participations (typical and atypical silent), profit participation rights, profit participation certificates and similar constellations, right up to leveraged and multiply leveraged products in the pecuniary loss liability insurance, today these are predominantly included in the exclusion list of many VSH providers.

The significance for sales is clear: on the one hand, increasingly complex products and the demand for more clarity, truth and transparency on the other. This leads to ever higher demands on sales and, of course, also on initiators.
A distributor who sells products that are not included in his VSH policy risks being treated as “driving without a license” in court in the event of a claim.
The law firm Fiala is familiar with the dilemma from its practical experience: (usually little-known) market participants try their hand as initiators without having the concepts they have often created themselves (possibly written off?) checked by a lawyer beforehand. Not because the experience is so distinctive, but mostly for misunderstood cost reasons. If then still the Anlegerschützer uncover the not rarely negligent organization, it becomes liability-technically dangerously close. It is not uncommon for the initiator, sales department and, above all, the intermediaries to find themselves in a shambles after such an uncovering. Especially the own economic existence is then massively threatened ? the costs then to be borne by the client himself for qualified advisors for the defence often amount to 20 times the costs of previous examinations.

VSH policies and concepts put to the test This means for distributors that only currently tested concepts, including VSH policies, offer a minimum level of security. The comparison with the activity and product profiles, which is currently available in the placement, becomes more important every day. A blanket coverage with a VSH policy, without the certainty whether the field of activity is really completely covered and insured, is just as disadvantageous as the belief “nothing can happen to me, because I work properly”. It is always better to check existing policies for completeness and, if necessary, to adjust or optimise them before taking out a product and, above all, long before a possible claim.
The not seldom high commissions on the one hand (which are paid out only with the switching), often go along with minimum budgets for folder organization and lawyer preliminary examination, knows RA Fiala from its practice.

Especially very innovative’ initiators sometimes offer highly dangerous products and combinations for the intermediary. It is typical that most insurers then do not offer any cover for this, and the intermediary usually finds out too late that the initiator was “given a few years in jail” because of legal errors. The obligation laid down by the Federal Court of Justice to check the investment models for “fiscal, legal and economic plausibility” will not only be massively overtaxing for the side-entrants. If then the initiator claims an examination in the training but cannot prove it, it is time to seek contact with experts and colleagues.
Risk profile analysis from a specialist broker A VSH specialist broker should definitely offer the benefit of recording a risk profile of the customer in order to be able to show the gaps in cover. On the other hand, unchecked and inexpensive VSH concepts, without comparing the risk profile, can basically be wasted money. If the “real risks” are not insured and this is only recognised in the event of a claim, it is an extremely expensive experience.

Due to the loss experience Ralf W. Barth knows also the situation that good brokers saw their business of many years sovereign operated existentially endangered, due to some few mediations within the range of participation business, which were not included in your VSH policy. Intelligent distributors and intermediaries use a VSH broker who also knows the problems of the distributor and can carry out product checks before a product is even taken on for placement.
VSH brokers can’t do magic either – but they can come up with the right partners Good VSH brokers not only design concepts for distributors and intermediaries, they also point out which partners (e.g. specialised lawyers etc.) the intermediaries can contact to find out how to “set themselves up” optimally in advance.
For example, by legally structuring various proprietary companies of the intermediary or distributor, a variety of liability brakes can be strategically built in altogether. It does not have to be the case that an uninsured claim in a closed-end investment necessarily leads to the loss of all income from the tangible assets.
Here are a few more examples of such risks that are not insurable: Legal and tax advice are not included, neither for the intermediary nor for the management consultant.
For yield information, forecasts, etc. there is regularly no VSH protection. Numerous searches at VSH insurers by VSH broker Barth have also shown that the ?IRR yield? (internal rate of return) often belongs to the non-insurable risks.

Crimes of all kinds, for example aiding and abetting or complicity in fraudulent schemes, are also not insurable. This includes, for example, kick-back cases, i.e. commissions which are not clearly recognisable to the customer in the concepts and which are concealed in brochures, for example.
Insidious can be also cases from the bAV range: VSH broker Barth informed whether a violation of the requirement of the value equality (after the BetrAVG since 01.01.2002) was insured as consulting mistake. The answer was predictable ? this is not insurable or there is no cover for this. This is because it is a statutory requirement, and breaches of requirements or prohibitions are never insurable under the VSH terms and conditions.
This applies by the way analogously to some windy time value account model, even if some offerers with dubious legal opinions arrange its training courses and/or the advertisement.
An experienced VSH broker knows the practical gaps in VSH coverage from many claims.
VSH optimisation for intermediaries ? also an initiator’s duty The more intermediaries consciously deal with the topic of optimal VSH protection in accordance with their activity profile, the more important it becomes for initiators to design their products in such a way that they are still insurable for VSH. Occasionally, initiators “save at the wrong end” and later find out that neither the sales nor the insurance cover for the intermediary has been designed in a sufficiently professional manner.
Particularly at risk and regularly underinsured are those persons who work as “training managers” or “broker supervisors” or “sales coordinators”: If they only learn from the press that they have accompanied a possible investment fraud, it is often too late to talk to the VSH broker.
VSH protection consulting requires market knowledge and a view of the future Only those who clearly know what the market demands and what things VSH insurers still cover can basically still bring a product reasonably from the conception to the implementation phase. From the legal support of initiators we know that many a concept has to be “turned around” two or three times until it is marketable. Ignoring the legal and statutory parameters often means a “free” invitation to the criminal court. This is proven for example by the reports of Heinz Gerlach (

Initiators can be divided into three categories: The sprinter, who very quickly implements sales with good ideas. The strongman who works on the matter and the safety concept forever, but who often lacks the sales approach. The persistent one, who has the sufficient funds at his disposal, but often has a potential for improvement in sales and product design. For all three, you need a partner in consulting who has an overview of which potentials need to be supplemented in terms of content and implementation. This is about shaping the future.

Consumer protection and the implementation of the EC Insurance Mediation Directive, the VSH protection that is thus becoming better known, will contribute to an increase in lawsuits against intermediaries. It is therefore all the more important to know and implement all possibilities of liability avoidance: A good VSH policy should only cover the residual risk ? Any gaps at this point can cost the existence.


by Dr. Johannes Fiala

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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