German Federal Supreme Court rules on mis-selling claim against direct bank providing execution-only services

On 19 March 2013, under file No XI ZR 431/11, the German Federal Supreme Court clarified the circumstances in which an investor may have a mis-selling claim against a ‘direct bank’ (in other words, a bank holding an account for the deposit of securities on an execution-only basis only).

No implied advisory agreement generally exists between an investor and a direct bank. Incorrect advice by an independent adviser instructed by an investor cannot be attributed to a direct bank. Only the financial institution that has the closest relationship to an investor has a duty to enquire as to investment experience. A direct bank may, however, be liable if it is aware or should have been aware that an investor is receiving negligent advice. The burden of proof is on an investor to show this knowledge…

If you are registered and logged in to the site, click on the link below to read the rest of the Allen & Overy briefing. If not, please register or sign in with your details below.

Briefings from Allen & Overy

  • ITC reaffirms its power to bar digital file transfers

    The ITC has reaffirmed its power to ban electronic transmissions from the US where those transmissions infringe an intellectual property right or are otherwise based on an unfair trade practice.

  • Changes to French takeover rules

    A new French law, the ‘Law to recapture the real economy’ (‘Loi visant à reconquérir l’économie réelle’ or ‘Loi Florange’), was made on 1 April 2014.

View more briefings from Allen & Overy

Analysis from The Lawyer

View more analysis from The Lawyer


One Bishops Square
E1 6AD

Turnover (£m): 1,189.00
No. of Lawyers: 2,304
No. of Lawyers (Asia Pacific): 357
Offices (Asia Pacific): 10