The term “capital investment law” is not defined under German law and, as a field relevant to various aspects of the law, touches upon a large number of statutes. As a special area of banking and capital markets law, capital investment law governs all the legal relationships that arise between the parties involved in the structuring and distribution of capital investments. These parties include, for example, the initiators, the issuers, and the sales agents as well as, at the other end, the purchasers of capital investments.

The stipulations of capital investment law also specifically govern the conditions under which aggrieved investors are entitled to claim damages and designates the parties against whom such claims may be made. It is a frequent occurrence for investors to be entitled to assert claims in tort or contract (e.g. for bad or misleading advice) against independent investment advisors, banks, and other parties involved, and in this way to reverse their purchase of a failed investment product and thereby obtain compensation for their damages.

We aim to inform our clients accurately and comprehensively about the opportunities and risks of legal action while setting the proper course towards a successful recovery. For this reason, we attach great importance to performing a complete investigation of the facts. The chances of prevailing in court (and against which party) always will depend on the circumstances of the individual case. We will be happy to inform you about your individual risks and opportunities in a free initial consultation.

In reviewing a claim, we take particular care to examine the respective investment products involved so that we can understand them fully down to the last detail. This is because an in-depth comprehension of the product often will be key to identifying the information obligations of the party offering the product – which obligations we can then adduce as the legal basis for successfully recovering damages or reaching a settlement on our clients’ behalf. Depending on the case scenario and the products involved, respectively, we also may call in expert consultants. This may happen in cases involving swaps, for example, where it is often expedient to have experts perform calculations to determine a so-called “negative market value.”

Moreover, we will assess the duties and standard of care that ought to have been applied under the respective circumstances. The standard applicable to an investment seller/broker, for instance, will depend on factors such as the context in which the investment was offered, say in the context of investment advice, investment brokerage or an execution-only transaction. Various standards and duties also apply under an asset management agreement.

Depending on the scope of duties involved, we also will examine whether the investor was advised in a manner that was appropriate to his/her personal profile and to the capital investment at issue before making the purchase. And we will check whether the investor was informed about the entirety of all risks (e.g. the risk of a total loss). The proper disclosure of any conflicts of interest or kickback arrangements also plays a key role for us in many cases. It goes without saying that we examine all the angles. In other words, we also will review, for example, whether any prospectus errors were made and whether parties outside the sales process, such as initiators, issuers, trustees or auditors, could be held liable. The goal of such an audit is to identify the optimal liability defendants. They have two defining features: First, any claims against the liability defendants must have optimal chances of success, i.e. they must be enforceable as quickly and easily as possible. Second, these liability defendants also must be solvent. It stands to reason that an enforceable judgment against an opponent without “deep pockets” effectively is worthless.

We advise on all aspects of capital investment law. The relevant cases typically will involve the following legal grounds:

→ breach of duty to inform and advise by independent investment advisors and bank advisors (investment advisor liability)
→ breach of duty to inform and advise by investment intermediaries (investment intermediary liability)
→ Liability for execution-only business
→ Liability of fee-based advisors
→ Asset management and liability

The investment products that typically play a key role in investment consulting and investment brokerage, and thus in our practice, include the following:

→ Failed investments in closed-end funds (e.g. ship funds, aircraft leasing funds, real estate funds, film and media funds)
→ ESG investments
→ Bearer bonds
→ Subordinated loans
→ Registered bonds
→ Corporate bonds