{"id":19404,"date":"2006-08-27T21:05:07","date_gmt":"2006-08-27T19:05:07","guid":{"rendered":"https:\/\/fiala.de\/distribution-and-intermediary-law\/"},"modified":"2006-08-27T21:05:07","modified_gmt":"2006-08-27T19:05:07","slug":"distribution-and-intermediary-law","status":"publish","type":"post","link":"https:\/\/www.fiala.de\/en\/distribution-and-intermediary-law\/","title":{"rendered":"Distribution and intermediary law"},"content":{"rendered":"

*by Johannes Fiala, Attorney at Law (Munich), MBA Financial Services (Univ.Wales), M.M. (Univ.), chartered
\nFinancial and investment advisor (A.F.A.), EGExpert (C.I.F.E.), banker (fiala4instalive.instawp.xyz<\/LINK>)
\nDistribution and intermediary law: what are contract brokerage, investment advice,
\nFinancial portfolio management,financial planning, investment brokerage and prospectus liability?
\nInvestment brokerage: Investment brokerage (also acquisition brokerage, especially in the
\ninsurance sector) is the mere brokerage of a third party’s investment
\n(no self-produced products).
\nWhat is owed is the provision of information and the execution of the mediation,
\nbut no counseling. The investor has a limited expectation here, because he only gets
\nobjective information and not a personal subjective evaluation of the product.
\nBut: This form (cf. \u00a7 1 Ia 2 No.1 KWG<\/a>, \u00a7 2 III No.4 WpHG<\/a>) is dying out
\nbecause as soon as the appearance of a consultation (e.g. by the firm addition ?economic consultation?,
\n?consulting?) is set, a consultation may be expected.
\nInvestment advice: The investment adviser does not only owe information (as in the case of the intermediary, i.e. information about facts),
\nbut also the expert assessment and consideration of the client’s personal circumstances.
\nOnce the client has made an investment decision, the duty to provide advice normally ends: In cases of damage
\nthat can change. The investment adviser also does not manage his client’s assets, so he has no authority to
\nto dispositions. The guideline for the obligations is the BOND ruling of the Federal Court of Justice (BGH) of
\n06.07.1993 (Ref. XI ZR 12\/93<\/a>).
\nBut: This form (cf. \u00a7 1 III 1 No.6 KWG<\/a>, \u00a7 2 IIIa No.3 WpHG<\/a>) is particularly prone to liability, because without documentation
\nit is difficult to prove that proper advice was given.
\nHowever, the BGH has stated that there is no obligation to provide written documentation. Excluded is
\nthe securities sector ? there are statutory record-keeping obligations pursuant to section 34 of the German Securities Trading Act (WpHG).
\nAsset management: Asset management,in the case of securities also referred to as financial portfolio management,
\nmeans the permanent independent management of the investor’s assets ? mostly according to previously agreed investor guidelines.
\nIn the sector of bank execution of wills or foundation transactions, the investment guidelines of
\nall too easily forgotten by some consultants. The asset manager therefore has a power of disposition,
\nIn addition, the client has duties to inform and advise, and the duty to safeguard the interests of his client.
\nBut: This form (cf. \u00a7 1 Ia 2 No.3 KWG<\/a>, \u00a7 2 III No.6 WpHG<\/a>) requires special authorisation by the
\nBaFin. A business licence is therefore not sufficient. The running costs of the necessary involvement of a
\nauditor are in the five-digit range p.a., cf. \u00a7\u00a7 32 f. KWG<\/a>. In German-speaking countries this is
\nmuch cheaper.
\nFinancial Planning: Financial planning includes the expert development of a (re)design of the asset structure,
\na preliminary stage, as it were, of asset management. As a rule, it should be a fee-based advisory service. In
\nin this area, financial planners are liable like experts. Financial planning is therefore particularly dangerous,
\nbecause the training sometimes seems grossly incomplete (e.g. many banking products,hardly any insurance issues), some
\nsoftware has calculated incorrectly and the scenario technique was missing in the planning ?
\nincluding controlling with benchmarks for an exit from certain investments. Some
\nBig bank was sued and lost good private banking clients: A software for risk optimization is missing until
\nto many a private banking advisor today.
\nBut: This form of activity easily crosses the line into unauthorized legal or tax advice.
\nThis allows clients to reclaim the fee from the bank or financial planner. A chamber of tax advisors
\nobtained a cease-and-desist letter from a major bank after the financial plan showed gross deficiencies in the
\nof a client’s tax advisor.
\nIn this case, cooperation with a tax advisor or legal counsel solves the problem in practice. resembles
\nThe situation is even worse for estate planning, i.e. inheritance and succession planning.
\nLiability-free activity through contract design?
\nAgain and again, even renowned market participants try to limit the liability for their activities in an inadmissible way: Even the
\nLiability for merely ?simple negligence? (and a fortiori not for gross negligence) can then not be
\neffectively exclude if essential contractual obligations are involved.
\nAt this point, some providers stand out from the start as unprofessional or unserious. Seriously, the
\nResidual risks to be adequately insured ? after a consultation about it.
\nLiability-free activity without a contract?
\nNot concluding a (written) contract with the customer is at least as negligent as not providing documentation.
\nto create. Even without a contract, a contract is usually concluded; and even then, unfortunately, in the
\nDoubts liable for anything and everything.
\nAnother trap can arise from a missing cancellation instruction in the case of doorstep selling.
\nLiability reduction due to contract content:
\nIt is through written contracts that the responsibility of the activity can be limited. This catches
\nto describe their own achievements ? and point out what is not to be done. As far as
\nno performance and responsibility is desired, a delegation can help further or a real cooperation.
\nThe more precisely this is legally formulated, the more effectively such a risk avoidance strategy can take effect.
\nProspectus liability in the narrow sense:
\nIt sticks ? even without a contractual relationship ? the initiators, product providers, founders, managers, designers of
\nInvestment and public companies.
\nThis may also include backers and guarantors (StB, RA WP) under special circumstances (see also
\nmore below).
\nIt?s not well known, ?prospectus? are all written documents, also internet pages and ?sample-calculations?
\n(e.g. ?false IRR yield preview? or ?embellished leverage yields?,created with the sales software
\nof the initiator). The initiator is regularly liable for only 3 years (limitation period), whereas the intermediary or consultant is liable for 10 years (limitation period).
\nyears (statutory ?farmer sacrifice risk?). If the intermediary arranges a combination of a life insurance policy with a foreign loan
\nhis ?own? If he uses his ?own? lever-arm-model, he also becomes initiator.
\nProspectus liability in the broad sense:
\nHere, as a rule, banks, investment advisors, investment brokers are liable ? if a concrete contractual or trust relationship
\nexists. This can also come about tacitly.
\nThe limitation period is 10 years ? in the area of securities, however, only three years (\u00a7 37 a WpHG<\/a>).
\nThis is where the ?investor-friendly? (can the customer afford it?) and ?object-fair? (are the details
\nlegally, fiscally, economically plausible?) advice, as can be found in the BOND ruling and in \u00a7 31 WpHG<\/a>.
\nLiability-free activity as an ?employee?
\nIn principle, an employee or agent can act under the name of a product provider (e.g. insurance company,
\nBank, Initiator) or a (Strukki-?-) sales organization occur. Then a regular
\nClaim against employee dismissed if investor fails to provide anything regarding employee’s personal liability
\nin court. The connecting factors are ?personal trust? (the intermediary has proven to be
\nexpert, specialist, etc.) and ?economic interest ? but not pure commission interest).
\nEconomic interest may exist, for example, if the customer is paid a special fee in addition to the ?usual? commission. commission a special fee
\nis calculated. Whether the product provider or distributor, who may be solely liable (to the outside world), then nevertheless
\ncan enforce recourse against the employee is another matter.
\nOne thing is certain, however: the BGH has recently judged it to be ?intentional immoral damage? according to \u00a7 826<\/a>
\nBGB, if employees are trained ?incorrectly? are trained. Also gaps can lead to ?wrong? training. All the more
\nit is more important for the employee to archive all sales and training documents for his own relief;
\npreferably in two places as a backup copy. The following shows how important this is:
\nExample: In the model country, a doctor invests DM 2 million in an LV; equity capital DM 150 thousand ? lends the remainder to the investor
\na bank. In the event of a claim, the intermediary is portrayed as a ‘fraudster’ by his product provider, and the bank and
\nInvestors advised to report: This only goes well until the intermediary provides a leverage transaction training document
\nfrom his archive: Speaker was v.a. also the sales director of the product provider -;).
\nExperts Archive: The old hands among the financial service providers have in your garage, attic or
\nboxes of old sales and training manuals in the basement. A space-saving alternative is the expert
\nArchive, as per the following link:
\nwww. e x p e r t e n . d e \/ N E T \/ w e b – site\/50991.website under ?advertisements?.
\nExamples of partly older liability cases are deposited there, such as liability for zillmerization or lack of equal value.
\noccupational pension schemes or working time account concepts. For the risks and side effects, consult your legal counsel, but
\njust not the sales manager of your product provider.
\nNo competition from honorary professions:
\nFor the StB, WP, RA it is valid that they exercise their profession ?independently and on their own responsibility? (also in liability)
\nhave to exercise. These professions include activities as real estate or insurance brokers, financial brokers, intermediaries of financial services
\nincompatible: this will result in the withdrawal of the licence. Accepting commissions is just as damaging, because the StB\/WP is not entitled to
\ncommercial activity is prohibited. If the accountant\/ auditor prepares an isolated financial plan without taking care of the core tax issues
\naspects, a (prohibited) commercial activity may also be presumed.
\nA cooperation offers itself here, because especially for legal and tax advice is the financial service provider
\nnever insured on his VSH policy:
\nThis is where the involvement of an honorary professional can relieve and exonerate the financial services provider. To the honorary professional
\nproduct knowledge is almost always lacking, so that here, as it were, a complementary partnership is required.
\nis possible. If the wife of the honorary professional is not sent forward to hold out both hands, one can
\nPresume fairness.<\/p>\n","protected":false},"excerpt":{"rendered":"

*by Johannes Fiala, Attorney at Law (Munich), MBA Financial Services (Univ.Wales), M.M. (Univ.), chartered Financial and investment advisor (A.F.A.), EGExpert (C.I.F.E.), banker (fiala4instalive.instawp.xyz) Distribution and intermediary law: what are contract brokerage, investment advice, Financial portfolio management,financial planning, investment brokerage and prospectus liability? Investment brokerage: Investment brokerage (also acquisition brokerage, especially in the insurance sector) is […]<\/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":[485,532,506,602,487,484,555,488,560,503,514,493,723],"class_list":["post-19404","post","type-post","status-publish","format-standard","hentry","category-veroeffentlichungen-en","tag-asset-management","tag-bafin-en","tag-bav-en","tag-schadensfall-en","tag-beratung-en","tag-dokumentation-en","tag-investment-advice","tag-haftung-en","tag-manager-en","tag-real-estate","tag-regress-en","tag-versicherung-en","tag-zillmerization"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/posts\/19404","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=19404"}],"version-history":[{"count":0,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/posts\/19404\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/media?parent=19404"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/categories?post=19404"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/tags?post=19404"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}