Strengthen Investor Protection

Bill to strengthen investor protection Gottingen, 05 March 2010 – press release from 03 March announced the Federal Minister of finance, Dr. Wolfgang Schauble, to introduce a discussion draft for a law to strengthen in April of investor protection and improving the functioning of the capital market. At the heart is the extension of the validity of the securities trading Act (WpHG) also on assets. The introduction of a consultation Protocol obligation as well as a registration and sanctions in relation to the investment advice is intended for institutions in this area. At the same time, the proposal involves tightening the requirements on prospectuses, as well as a substantive review by the Bundesanstalt fur Finanzdienstleistungsaufsicht (BFin).

Increased requirements for prospectuses relating to the requirements for equity and bond prospectuses are so-called assets also for providers such as closed-end funds in the future more detailed brochure content, such as information on bankruptcies required, which should allow investors a better assessment of the seriousness of the initiators of the offer. Also the way is namely not only formally liberated with the proposed amendment to the prospectus requirements for a more extensive examination of BFin investment prospectuses – completeness in terms of statutory minimum information, but also in terms of content clarity and consistency (so called coherence test”), how she has taken place so far only in securities. Restricted aggravations for advice and mediation at the sales in the future also apply to the sales of shares in closed-end funds requirements of the WpHG, such as investor-friendly advice, keeping a log of the advice and disclosure of commissions. Dr. Matthias Gundel, Managing Director of the firm GK-law.de, specialising in capital market law generally welcomed the proposed changes, admits the following in terms of distribution however: “these increased requirements concern only a part of the distributors because according to the specifications of the Ministry are but not intended for free agents only for KWG licensed financial services provider. “This also applies to registrations of advisors with the BFin and sanctions in case of non-compliance with German Securities Trading Act regulations”. To ensure legal certainty with a single legal framework in the area of closed-end funds and other assets, the consultation requirements should be designed regardless of the distribution channel. Remains to be seen how the Bill will be modified in this regard yet. The Government Bill to be adopted by the Cabinet in the summer.

Comments are closed.