Lehmann Brothers – Investors receive warranty certificates due Enlightenment breach damages

The u. a. for the banking competent XI. Civil Division of the Federal Court has dealt in two other procedures so, whether an advisory bank in connection with the recommendation of certificates of the Dutch subsidiary Lehman Brothers Treasury Co. B.V. (Issuer) der US-amerikanischen Lehman Brothers Holdings Inc. (The warranty) is obliged to pay damages. The focus of the decisions on the question, whether an advisory bank in the distribution of “Garantiezertifikaten” must inform unasked about special termination rights of the Issuer. The Federal Court has acknowledged such duty to inform.

In the process XI ZR 480/13 acquired by the plaintiff in November 2007 on the recommendation of an employee of the defendant bank 40 Piece of “Lehman Brothers warranty certificate on five bank title” nominal value of 39.328 €. In May 2008 he acquired on the recommendation of the same employee more 100 Piece Lehman certificates “LB 6 Year CatchUp note on six DAX stocks” nominal value of 100.000 €.

In the process XI ZR 169/13 acquired by the plaintiff in May 2008 on the recommendation of an employee of the same defendant bank “Lehman Brothers shares coupon bonds on six DAX values”, d. h. so-called Basket Certificates, the market value of 33.099 €. In the related product flyer it says u.a. “100% Capital at maturity”.

The Warrants were the terms and conditions of the Issuer to the Base Prospectus dated 28. August 2007 underlying. Thereafter, the Issuer at maturity should be independent of the performance of the Underlying at least 100% repay the capital paid to the investor. To the terms of the Issuer is a special right of termination for reasons of a Merger Event, a takeover bid, a delisting, Nationalisation, insolvency of the committed projects in the certificates in business or granted because of measures taken or planned changes to tax rules. In these cases, the investor will receive a redemption amount, calculated by a calculation agent from the fair market value of the Certificates, less reasonable expenses and costs. It is stated in the Terms and Conditions, that the Early Redemption Amount may be less than the par value or may even be zero. In the special right of the Issuer and its legal consequences, the applicants were not informed by the defendant. The loan terms were not also give them.

Following the bankruptcy of the Issuer in September 2008 the certificates were largely worthless. In the process XI ZR 480/13 requires the plaintiff repayment of the investment amount minus payments from the bankruptcy proceedings in the amount of 98.709,64 € plus interest train to train transfer of the Certificates, Payment pretrial legal fees and the identification of, that the defendant is in accepting the certificates in default. The lawsuit was predominantly in the lower courts Success.

The plaintiff in the proceedings XI ZR 169/13 seeks repayment of the invested capital in the amount of 33.099 € and the payment pretrial legal fees. The district court ordered the defendant asked of. The Court of Appeal has amended the judgment to the effect, that the defendant merely to pay 27.472,17 € train is required to train against transfer of allowances and the claims of the plaintiff in the insolvency proceedings of the Issuer. The ongoing lawsuit dismissed it on the ground, that the plaintiff against its loss mitigation (§ 254 Abs. 2 Set 1 BGB *) had failed, because he had failed, its claims in the bankruptcy proceedings of the Guarantor with the prospect of obtaining a refund of 17% to register his claim within the time.

The revisions of the defendant bank have been unsuccessful in both cases. The same applies to the proceedings XI ZR 169/13 raised cross-appeal, the plaintiff.

According to the Federal Court, the Courts of Appeal have rightly affirms a culpable violation of the obligations under the Investment Advisory Agreement concluded in both litigation and therefore sentenced the defendant bank err in law to pay damages (§ 280 Abs. 1 BGB **). The recommendation of allowances was not justice system in both processes. The Certificates it was bearer bonds with guaranteed capital. In such “Guarantee certificates” has an advisory bank investors of the regulated in the Special Terms and Conditions Issuer Call, which can lead to a total loss of capital, enlighten unasked. For a special right represents a significant investment decision for the enlightenment and thus in need of circumstance. Is an essential feature of a warranty certificate with 100% capital protection, that the investor's risk of limited, with the amount invested during the investment period possibly not generate profit or that the Issuer becomes insolvent. Which stands a special right diametrically opposed, in the transfer determined by the Calculation Agent in its reasonable discretion market value fall below the amount invested or even may be zero.

In the process XI ZR 169/13 the Court of Appeal for the alleged damages the plaintiff According to the Bundesgerichtshof also err in law 17% reduced. The court does not span the requirements for the loss mitigation, because under § 254 Abs. 2 Set 1 BGB meets an investor the obligation, the damage caused by actions, the required seem under the circumstances and are reasonable, to minimize. If you think he – as here – against this obligation, because he does not register its claims in the bankruptcy proceedings against the Guarantor, he must take a cut of his claim for damages in the amount to purchase, he could have received in the insolvency proceedings (§ 287 Abs. 1 Code of Civil Procedure ***).

Case 25. November 2014

XI ZR 169/13

LG Hamburg - Judgment 18. November 2010 – 334 The 95/09

Higher Regional Court of Hamburg - Judgment 11. April 2013 – 6 You 235/10


XI ZR 480/13

LG Hamburg – Judgment of 27. January 2012 – 330 The 476/10

Hanseatic Higher Regional Court – Judgment of 4. December 2013 – 13 You 18/12

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