5.4.4 Prospectus liability in the narrow sense or proper prospectus liability

The basis of prospectus liability in a narrow sense is the trust and confidence inspired to the investor by a person who had a special influence on the issuer and/ or had a special role in the preparation of the prospectus.1 This relationship of trust and confidence is not based on the personal trust and confidence as in the aforementioned relationship between the bank and its clients. The basis of prospectus liability in the narrow sense is a breach of the investor's standardised trust and confidence (typisierten Vertrauen).2 The defendant's profession or expertise inspired trust and confidence in such a way that he implicitly warranted the correctness of the information in the prospectus and thereby induced the investor to acquire the securities while in fact the information in the prospectus was misleading.3 The German Federal Court of Justice (Bundesgerichtshof, BGH) ruled that the persons liable for the prospectus in the narrow sense are:

The auditor who gives a statement on the accurateness of the prospectus contents after making his due diligence inquiry is liable for his statement in the prospectus towards the investors on the condition that he was grossly negligent in his due diligence inquiry.5 Unlike under the prospectus liability regime based on the Stock Exchange Act, to be discussed in section 5.4.6, the accountant's liability is not restricted to situations in which the accountant assumes responsibility in regard to the entire prospectus. Persons are liable for misinformation in puts of the prospectus contents for which they are responsible; the accountant is liable for his statements in regard to the past annual accounts constituting an essential part of the entire prospectus contents.6