Investment advisor liable for failure to disclose outdated prospectus forecasts

According to the Higher Regional Court of Stuttgart, an investment advisor has a duty to draw investors' attention to prospectus forecasts that are "outdated" by reality at the time of subscription and are therefore too positive. This may include the obligation to compare published annual financial statements with prospectus forecasts.

Facts of the case

The plaintiff had acquired an investment from the defendant investment advisor as a trustor limited partner. The sales prospectus handed over to him on the occasion of the subscription in May 2018 in the version of addendum no. 1 and no. 2 was dated 25 January 2016 and contained, among other things, a forecast of the fund company's annual financial statements for 2016. The 2016 annual financial statements were not published until 20 February 2018. When the investment became non-performing, the plaintiff claimed damages as the defendant had advertised the investment as safe and profitable. The regional court ruled in favour of the claim, against which the defendant lodged an appeal.

Decision

The Higher Regional Court (OLG) dismissed the appeal. The defendant should have realised that the prospectus submitted in May 2018 was incomplete with regard to the annual financial statements for 2015 and 2016: At the time of the investment advice, both annual financial statements had already been published, but the prospectus only contained the preliminary annual financial statements for 2015 and a forecast for 2016. This constituted a breach of Section 11 (1) sentence 1 and sentence 2 no. 1 of the German Investment Act (VermAnlG) in the version dated 3 July 2015, according to which a supplement to the prospectus must be prepared for newly published annual financial statements of the issuer - which was not done in this case.

Irrespective of this, the defendant was obliged under the investment advisory agreement to review the prospectus for recognisable errors or incompleteness and, in particular, to disclose negative deviations. Such a discrepancy arose from the discrepancy between the forecast for 2016 contained in the prospectus and numerous relevant (significantly more negative) key figures in the annual financial statements actually published on 20 February 2018. The defendant was obliged to inform the plaintiff of this, especially as it was aware that it did not have the actual published annual financial statements for 2015 and 2016.

Note

In conclusion, the OLG should be endorsed. However, the reasoning is somewhat "blurred". Firstly, in connection with the incorrectness of the prospectus pursuant to Section 11 VermAnlG old version, the OLG emphasises that the defendant "should have noticed" this, which seems to indicate an independent breach of duty on the part of the defendant. In a further reasoning, the OLG then postulates the defendant's duty to "review the prospectus for recognisable errors or incompleteness", which was breached in the present case. Whether the OLG assumes two different breaches of duty here remains unclear. On the merits, the latter reasoning also includes the defendant's obligation (not expressly stated) to review on its own initiative the annual financial statements already published at the time of subscription, with regard to which the prospectus only contained preliminary information or forecasts. This was the only way the defendant could have recognised and addressed the negative deviations in reality from the forecast for 2016 in the prospectus.

Based on the case law of the Federal Court of Justice (BGH), however, the OLG could have left it at naming the second breach of duty. Since the prospectus provided was incorrect with regard to Section 11 VermAnlG (old version), the only issue in the present case was whether the defendant drew the plaintiff's attention to the negative deviations between the forecast for 2016 and the actual key figures for that year published at the beginning of 2018 (but before subscription) (see BGH decision of 17 September 2009 - XI ZR 264/08). However, this was not the case here.

(OLG Stuttgart, judgement of 01.07.2025 - 6 U 119/24)