The complaints committee of the Dutch Securities Institute (DSI) recently delivered its judgment on a number of disputes concerning a share lease scheme sold by Legiolease. On February 5 2003, some investors were awarded a relief of the largest part of their remaining debt with Legiolease.
Most of the disputes revolved around two issues: misleading advertising and attributable shortcoming in the exercise of proper care.
In some cases, alleged misleading advertising did not form a basis for a successful investor deception claim against Legiolease. Although DSI acknowledged the Legiolease information material emphasized a continuously favourable yield, it also stipulated that the material did contain a risk warning. DSI ruled that the investor's free choice to invest entailed a responsibility for the investor to study the information material provided carefully.
A number of investors suggested that the information material led them to believe that the scheme involved a form of saving. In some cases, DSI held that these suggestions were unjustifiable because the lease contracts clearly referred to the leasing character of the scheme.
DSI decided in a number of cases that Legiolease had not exercised proper care to the investor. Due to the chosen sales structure of the leasing scheme, Legiolease could not check on an individual basis whether investors' financial liabilities matched their financial position. As a professional provider of investment products, Legiolease should have taken into account that important negative share price fluctuations could occur. DSI further stated that Legiolease should have provided some sort of arrangement to cover possible losses. As no arrangement of any kind was provided to the investors, Legiolease was held liable.
DSI plans to deal with more share leasing disputes soon.
Saskia Akse and Matthieu Ph van Sint Truiden
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