Commerzbank AG Can Not Be Held Liable for Misleading Wirecard Buy Advice!

Commerzbank claim lost

Commerzbank AG Can Not Be Held Liable for Misleading Wirecard Buy Advice!

Adverse decision of the Koblenz regional court for a Wirecard investor!

On December 22, 2023, the regional court in Koblenz, Germany decided that Commerzbank AG  – one of the biggest banks in Germany – is not liable for recommending investments in Wirecard although knowing about irregularities within the Wirecard group (Az. 3 O 180/23).

 The verdict is not yet final.

The details:

The plaintiff maintained a securities account, Commerzbank. As part of this securities account, he held shares in Wirecard AG. On April 30, 2020, he bought 312 further shares in Wirecard AG for € 95. He then had 1,232 shares with a total market value of € 117,040 at the time. On September 18, 2020, the plaintiff sold all his Wirecard shares for € 0.83, generating proceeds of € 1,022.

Commerzbank AG maintained a close business relationship with Wirecard AG for many years. In spring 2019, Commerzbank AG  – triggered by an FT (Financial Times) article – started and conducted its own review of some cross-border transactions it processed for Wirecard Bank AG.  The bank subsequently forwarded on February 26, 2019, 345 suspicious transactions identified from the period from March 2013 to January 2019 to the FIU (Financial Intelligence Unit).

On June 25, 2020, Wirecard AG filed for insolvency, whereupon insolvency proceedings were opened over the assets of Wirecard AG on August 25, 2020.

The plaintiff contends that despite internally deciding to sever business ties with Wirecard AG in May 2020, Commerzbank AG continued to endorse the purchase of Wirecard shares. Moreover, the plaintiff believes that Commerzbank AG, through its Management Board, failed to disclose critical information to its custody account clients, which precipitated the abrupt cessation of the defendant’s business dealings with Wirecard AG. The plaintiff argues that the defendant was under a legal obligation to issue a corresponding ad hoc notification in compliance with Art. 17, para. 1 of the Market Abuse Regulation (MAR) and §26 of the German Securities Trading Act (WpHG).

Accordingly, the plaintiff maintains that Commerzbank AG should be liable for the resultant damages about the depreciation of Wirecard AG’s share value. This claim is predicated on an alleged (secondary) breach of the custody account agreement and is directly supported by Sections 97 and 98 of the WpHG.

The regional court dismissed the claim, but the decision is not final.

The court's rationale is as follows:

  • The plaintiff’s claim does not fall under Sections 280 and 241 of the German Civil Code (BGB) in conjunction with the existing custody account agreement. Notably, the agreement does not encompass comprehensive ongoing asset management or a duty to provide advice regarding real-time capital market events. Responsibility for investment decisions ultimately rests with the client.
  • The plaintiff has not conclusively specified which information Commerzbank AG allegedly withheld.
  • Considering the plaintiff’s assertion regarding the sudden termination of Commerzbank´s business relationship with Wirecard AG, it’s important to note that under § 47 (1) No. 1 of the German Money Laundering Act (GWG), Commerzbank AG was prohibited pursuant to § 47 (1) No. 1 GWG from informing the contractual partner, the client of the transaction or other third parties of an intended or submitted report to the Financial Intelligence Unit according to Section 43 (1) GWG.

The Wirecard scandal continues:

The judgment is a shame for Germany. 

The court even denies the application of the duty of care for contractual relationships. Heike Pauls,   Commerzbank AG´s infamous analyst, praised investments in Wirecard up to the very end and even called the FT articles out as “fake news.” 

The Wirecard scandal has massively damaged the shareholder culture in Germany. Small shareholders have lost billions of euros due to the Wirecard insolvency. In his latest report to the creditors’ committee, the Munich-based lawyer Michael Jaffé reports that 44,700 retail shareholders have registered almost € 7.72 bn in claims with the insolvency administrator.

Up to now, all involved parties deny any responsibility and the German courts also do not recognize the importance of building up trust in the German authorities again (compare also the BGH decision dating January 16, 2024).

This ruling does not improve the situation at all  – it does quite the opposite.