{"id":18170,"date":"2008-09-14T08:10:14","date_gmt":"2008-09-14T06:10:14","guid":{"rendered":"https:\/\/fiala.de\/financial-scandal-in-the-principality-of-liechtenstein-shakes-financial-centre\/"},"modified":"2008-09-14T08:10:14","modified_gmt":"2008-09-14T06:10:14","slug":"financial-scandal-in-the-principality-of-liechtenstein-shakes-financial-centre","status":"publish","type":"post","link":"https:\/\/www.fiala.de\/en\/financial-scandal-in-the-principality-of-liechtenstein-shakes-financial-centre\/","title":{"rendered":"Financial scandal in the Principality of Liechtenstein shakes financial centre"},"content":{"rendered":"

Category: What’s cooking?
\nBy: Dr. Johannes Fiala, Attorney at Law (Munich), MBA Financial Services (Univ.),<\/p>\n

Investment in Liechtenstein: over 200 million
\nState liability action – creditworthiness risks or questionable
\nInsolvency protection for German investors<\/p>\n

In 2003, the Financial Services Authority (AFDL, now: FMA,
\nFinancial Market Authority) the “Technology Fund Silicon Valley Equities” of Liechtenstein
\nFund company “Hermann Finance AGmvK” under a special observation, a
\n“Monitoring”: Despite the obligation to maintain official secrecy and without a legal basis, the following were
\napparently informed competitors of the fact, as the applicant’s representative, RA Magister Falkner
\nreports.
\nThe decision on monitoring was the responsibility of the Liechtenstein Investment Fund Association,
\nan association of all investment undertakings in Liechtenstein. Besides
\nother faults of the ADFL, the negative publicity in particular had led to the withdrawal of the
\nof investor funds from large investors or was the reason for gaps in new business.
\nbeen. In 2005, the fund was liquidated. The suspicion is that it is a
\ninvestor-damaging envy campaign by conservative competitors.
\nThe question of the causality of the damage is legally exciting.
\nFund Manager Dipl.Ing. J\u00fcrgen Hermann already defended himself once with success: The
\nAdministrative Court of Liechtenstein had ruled in 2004 that the monitoring to
\nHermann Finance AGmvK” already inadmissible due to serious formal errors
\nhad been. The fact that the fund manager, among others, was not given a legal hearing is piquant.
\nhas been granted. Fund manager Hermann is now demanding 200 million Swiss francs in legal action.
\nfrancs from the Principality of Liechtenstein as compensation for damages.<\/p>\n

German asset managers and investors flee abroad<\/p>\n

Numerous asset managers from Germany have, in view of the threatening
\n“Special contribution” notices from the EdW (Entsch\u00e4digungseinrichtung der
\nsecurities trading company) because of the case “Phoenix Kapitaldienst GmbH”, abroad
\nwithdrawn – also to Liechtenstein.
\nhttps:\/\/www.e-d-w.de\/bibliothek\/download\/Schadensmeldung-Phoenix.pdf<\/a>
\nThe “Hermann Finance case” shows that when doing business abroad, there is a
\nconsiderable “country risk” may exist. For example, some asset managers from
\nSwitzerland selected Gibraltar as another location – why not Liechtenstein?
\nThe financial scandal culminated in September 2004 in the spectacular finding by the
\nFund manager’s lawyer that “due to a mistake in the law” investor money in the
\nfunds did not constitute special assets at the time, but fell into the bankruptcy estate !
\nHundreds of thousands of German investors are also affected by such risks: On the run
\nbefore German final withholding tax, they move their assets into life insurance shells
\nof foreign insurance companies. Their security is deceptive:<\/p>\n

The example of life insurance: Clean financial centre – unclean distribution?<\/p>\n

For years, life insurance companies from Liechtenstein have been advertising with the
\n“Bankruptcy privilege” of special needs trusts in life insurance wrappers: The unbiased
\nreader believes that he can, even at the last moment, get a part of his fortune “over the
\nBorder to safety”. However, this has two horse’s feet: on the one hand, there are in the
\nGerman Insolvency Code, in the Avoidance of Proceedings Act and also in the Liechtenstein
\nBankruptcy Code to observe certain periods of shame.
\nIn addition, however, “the choice of law of Liechtenstein law in particular in
\nis inadmissible in such cases where it is held by a German national with
\nhabitual residence in Germany and the contract is concluded with the involvement of a
\nMlttelsperson comes about.” In concrete terms, this means that the person who has a German
\ncredit institution is not subject to the bankruptcy privilege. The FMA had
\nrepeatedly pointed out. This also applies accordingly if a German intermediary (e.g.
\nbroker) drives across the border together with the customer.<\/p>\n

Hedging credit risks – What investors can learn from the Phoenix case<\/p>\n

The Pheonix case shows that a separate special asset (e.g., insurance shell)
\ndoes not necessarily mean effective protection of client funds. One to two
\ncriminal subjects to give the customer a total loss. Then it comes down to
\nCredit ratings of bank, trustee, asset manager and insurance company,
\nnamely whether they will be able to compensate for such damage. The usual
\nDeposit protection may then amount to just 30,000 Swiss francs.
\nFranks. As a rule, even renowned parent companies of such
\nInsurance shell providers to provide a letter of guarantee for such claims.
\nMalicious rumor has it that there was an asset manager who “made his own
\nUS stock corporation”, solely in order to then be able to offer for the managed customer custody account (in the shell
\nof a life insurance company) to buy its worthless shares: later, the administrator had disappeared without a trace.
\ndisappeared – the insurer noticed all this only much later, because there was no
\nclose-meshed “monitoring with shadow accounting” was in place: this theoretical
\nexample shows that without risk management in contract design it will hardly be possible to
\nis to provide the investor with the security that is often advertised to him.<\/p>\n

Risk management for investors and intermediaries<\/p>\n

According to settled case law, it is one of the tasks of financial brokers to
\nof banks, insurers and initiators for plausibility. This also includes the
\nTotal loss risk. At the latest in the case of investments abroad, customers and intermediaries will not be
\nto sound out the creditworthiness risks through well-founded legal and contractual analysis.
\nLack of information about the total risk of loss and false information about alleged
\nBankruptcy protection always entitles investors to rescission.
\nBecause the good name of a renowned parent company, or the reputation of a
\nfinancial centre, do not in themselves constitute any guarantee of sufficient seriousness and
\nSecurity of a capital investment – even abroad.<\/p>\n

(hotelier.com (01\/29\/2008))<\/p>\n

Courtesy of www.hotelier.com<\/a><\/LINK>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Category: What’s cooking? By: Dr. Johannes Fiala, Attorney at Law (Munich), MBA Financial Services (Univ.), Investment in Liechtenstein: over 200 million State liability action – creditworthiness risks or questionable Insolvency protection for German investors In 2003, the Financial Services Authority (AFDL, now: FMA, Financial Market Authority) the “Technology Fund Silicon Valley Equities” of Liechtenstein Fund […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","rank_math_focus_keyword":"","rank_math_description":"","rank_math_title":""},"categories":[492],"tags":[542,516,510,529],"class_list":["post-18170","post","type-post","status-publish","format-standard","hentry","category-veroeffentlichungen-en","tag-makler-en","tag-life-insurance","tag-reversal","tag-schaeden-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/posts\/18170","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/comments?post=18170"}],"version-history":[{"count":0,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/posts\/18170\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/media?parent=18170"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/categories?post=18170"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/tags?post=18170"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}