5.7.5 Own fault or contributory negligence

In case of fault on the part of the investor (Mitverschulden) contributing to the occurrence of losses, the reduction in the amount of compensation to be paid by the defendant depends on the circumstances of the case. In particular, it is important which party principally caused the occurrence of the losses.1 In prospectus liability cases, the claim of contributory negligence on the part of the investor is reticently accepted by German courts. The investor may rely on the professional experience of the issuer and/or the lead manager. The investor cannot reasonably make any other investigation with respect to the securities on offer than rely on the statements in the prospectus.2

On the basis of section 254 GCC, contributory negligence by the investor will only arise in case of a serious breach of duty in regard to the assessment of the prospectus.3 A statutory exception is provided for in section 45(2)(3) of the Stock Exchange Act: the investor cannot claim restitution of the cost price if he knew at the moment of acquisition about the falseness or incompleteness of the information contained in the prospectus. Furthermore, the investor owes a duty to avert and mitigate his losses on the basis of section 254(2) of the German Civil Code towards the defendant. For example, the investor owes a duty to sell his securities at the moment the misleading nature of the prospectus is revealed. If he keeps the securities, the continued fall of the securities price is home by the investor.4 There is only a breach of duty, if the investor fails to mitigate losses which one may expect an ordinary and reasonable person would have mitigated.5 However, it is noteworthy that the duty to mitigate the losses by selling the securities when the price starts to fall is irrelevant for claims based on section 44 of the Stock Exchange Act because the defendant company is not liable to pay damages; he has to pay the price for which the claimant bought the securities in return for the securities.6