5.4.3 Prospectus liability in a broad sense or improper prospectus liability

If a bank, not necessarily one of the sponsoring banks, is involved in a securities sales contract with one of its clients, the bank owes a duty to provide information, give advice or wam its clients with respect to their respective investment decisions. Even though the bank is neither a party to a contract nor a representative/agent of one of the parties, it qualifies as a person who is still involved in the conclusion of the contract in the sense of section 311(3) GCC. This party has to be the custodian of its client's interests (Sachverwalter). If the bank is giving investment advice, he is subject to the prospectus liability in a broad sense. The investor has to base his claim for damages on section 311 in conjunction with section 280 GCC.

The liability is based on the personal trust and confidence inspired to the investor by the information or advice provided by the bank.1 Objective advice can only be provided on the basis of sound and reliable information. For that reason, the bark's advice gives the impression to the investor that the prospectus provides true and fair information and that it can be relied upon by the investor when making his investment decision.2 The investor is entitled to expect that the bank using the prospectus to promote that particular investment or to give investment advice, made a general inquiry as to the correctness of its contents.3 This principle is based on the notion that the investor may lawfully rely upon the professional qualities of his investment adviser. If the investor is wrongly advised on the risks and conditions of the investment, because the adviser made use of a misleading prospectus, then the adviser is liable for breach of his duty to inform, if it is established that he failed to make due and careful inquiry into the correctness of the prospectus contents.4 In principle, there is no duty to inform professional investors, if they knew that there is a considerable risk of total loss on their investment and for that reason they expressly declined the written information materials with respect to the investment. In that case, the own fault doctrine will apply.