Obligations for Investment Brokers – Clear Delimitation by the BGH August 2024

The Federal Court of Justice ruled that a qualified audit opinion in annual financial statements does not automatically trigger an audit obligation for investment brokers. A qualified audit opinion does not represent a „red flag“ that requires a comprehensive plausibility check or inspection of all financial data. An investment broker is only obliged to audit annual financial statements in detail if there are concrete indications of economic risks.

The court has thus made it clear that the role of the investment broker is clearly different from that of an investment advisor. While investment advisors have a comprehensive duty to check and assess the creditworthiness of the recommended investment products, a broker is only obliged to provide basic information about the key investment facts. The liability of an investment broker is therefore limited to inadequate information , unless there are clear warning signals.

What does this mean for investment brokers in practice?

This decision brings considerable relief for investment brokers. Until now, it was unclear to what extent an broker must get involved in the financial audit of a company whose products it sells. According to the new ruling, it is sufficient for the broker to explain the basic structure and functioning of the investment in a comprehensible manner. A detailed analysis of the financial situation, however, is not necessary as long as there are no particular grounds for suspicion.

For you as an investment broker, the ruling means that you can act on a solid legal basis when brokering capital investments, as long as you pass on the essential information about the investment product in a transparent and understandable manner. The responsibility for a comprehensive credit check remains with investment advisors , who offer sound advice and are explicitly commissioned to carry out more in-depth checks.

What measures should you take?

Even if the ruling excludes a comprehensive audit obligation for intermediaries, it is still advisable to have a solid basic knowledge of investment products and to inform yourself about all the key aspects of the products you are brokering. Further training in the area of ​​investment brokerage and securities compliance can help you understand the current legal requirements and ensure that you correctly fulfill your audit obligations. It is particularly important to draw a clear line between the tasks of an intermediary and an advisor in order to avoid liability risks.

S + P offers a recommended seminar in this area for sales and compliance officers . In this course, you will learn how to legally correctly fulfill the role of a compliance and sales officer in the securities sector. The seminar provides you with practical strategies for complying with audit obligations and shows you how to avoid legal pitfalls.

Conclusion: The agent’s responsibility remains limited

The BGH ruling strengthens the position of investment brokers by clearly defining the duty to check and highlighting the differences to the role of the investment advisor. For you as an investment broker, this means a certain amount of relief: you are only obliged to carry out further checks if there are clear indications of economic uncertainty and are not automatically liable for failure to carry out a check. Nevertheless, it remains important to carefully check the basic information on the products you sell and always observe the boundaries of the duties of an investment advisor.