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Professional conduct rules and investors' compensation

Professional conduct rules and investors' compensation


Under the current unstable and of extensive risks circumstances in the capital market, where the information is faulty and often consultancy services are not the adequate, taking into consideration the general rule of opposing interests between the investment firms and the investors, the latter suffer damages which are often due to the actions of the firms offering the investment services. With the objective of ensuring the protection of the investors, both the Directive 2004/39 [known as ΜiFID ] and the Law. 3606/2007 which integrated the aforementioned directive in our national legislation, instituted a series of professional conduct rules which have to be observed by the investment firms-credit institutions during the provision of investment services.

It is worth mentioning that both the Directive ΜiFID as well as Law 3606/2007, do not mention the penalties in case of violation of the professional conduct rules by the investment firms. It is, however, certain that said rules affect private law through their contribution in establishing the meaning of "illegal", in the context of damage claims of investors against te investment firms-credit institutions. To the extent, moreover, that these rules outline the minimum standards that the provided services must meet, these rules undoubtedly constitute an important aid for the civil judge, in order for him to be able to determine and specify the contractual or precontractual protection obligations the provider of investment services has, according to the general law, toward the investor.

On case-law level, up until now at least, the establishment of civil liability against the providers of investment services was based on legal grounds such as tort (914 Hellenic Civil Law), violation of transactional obligations, based on the meaning of these as defined by the article 281 and 288 of the Greek Civil Code, as well as by the provisions of the law concerning consumer protection [Law. 2251/1994], while in other European countries invoking contractual obligations on similar disputes, becomes even more often. The pros of contractual liability as opposed to tort liability concern firstly, the "security" the provision of an investment services contract offers, secondly, the strict liability of the credit institution due to which the investor is relieved of the obligation of proof of the credit institution's employees' wrongful act and third, the greater extent of the damage for which a compensation is claimed.

The already issued rulings of the Greek courts slowly put forth an interesting case-law development concerning the liability of the credit institutions and the investment firms toward the investors, by paving the way for the trial of cases where the investors suffered damages to their assets during the provision of investment services.


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