Investment services: breach of disclosure obligations.

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By judgment No. 24010 of September 6, 2021, concerning damages for breach of information obligations in the provision of investment services, the Court of Cassation clarified some procedural and liability aspects relating to the joint and several liability of financial promoters (“promotori finanziari”) and intermediaries.

In particular, with regard to the alleged breach of the disclosure obligations under Articles 26 and 29 of Consob Regulation No. 11522/1998 and Article 21 of Legislative Decree No. 58/1998 (“TUF”), the Court of Cassation clarified that the information obligations are not less extensive if the financial transaction is executed on the basis of an order given by the customer. Indeed, according to the Supreme Court, information must be provided in any event, even when the provision of financial services takes place through an individual investment service pursuant to Article 1, paragraph 5, of Legislative Decree no. 58 of 1998 (i.e. by means of trading, reception and transmission of orders), under different conditions depending on the purchaser and on the moment in which the transaction is executed. Consequently, the protection of the client is in any case entrusted to the fulfilment, by the intermediary, of specific and personalised information obligations, pursuant to Article 21 of the aforementioned Legislative Decree No. 58 of 1998.

In the case at hand, the Supreme Court deemed that the failure to report the inadequacy of the investment is per se a breach which justifies the award of damages.

From a procedural standpoint, the Court also clarified that when an unlawful act is attributable to more than one person, the question of the seriousness of their respective faults and the extent of the resulting consequences can be examined by the first instance judge, seised by the injured party, only if one of the co-debtors has brought an action of recourse against the others or, in view of a recourse, he/she has expressly requested such an assessment in order to internally share the burden of compensation with the co-responsible parties. Such a request, however, cannot be derived from the objections by which the co-debtor excluded his/her liability in the different relationship with the injured party (Court of Cassation, December 20, 2018, no. 32930, Court of Cassation, August 25, 2006, no. 18497). Therefore, the question relating to the allocation of liability between the intermediary and the promoter cannot be raised ex officio, but must be the object of a specific request or objection by the defendant as co-author of the damage. Such a requirement would not have been necessary if the issue had been raised ex officio (see Court of Cassation May 20, 2011, no. 11259).

m.divincenzo@macchi-gangemi.com

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