Adviser errors may, but need not necessarily cause the asset manager or investment adviser to be liable. Errors may occur in all areas of adviser activity – information, explanation, elaboration of investment strategy, implementation, monitoring – and must occasion loss in order to be relevant.
There is no guarantee of success! And: High returns = high risk.
Anyone who, following correct explanation, consciously decides on a risky strategy should not be surprised if he incurs a sudden loss.
Principle of liability
If a customer suffers a loss due to incorrect advice or investment of his assets, the question arises as to the liability of the adviser or manager. A further principle of liability comes into play, depending on whether the service was gratuitous or against payment:
- Provision of advice and information against payment:
- Compensation for loss in accordance with contract law. The advice of a bank with which the customer holds a deposit is also against payment. The bank earns indirectly on stock exchange transactions that the customer makes on the basis of the advice.
- Advice and information provided gratuitously:
- Culpa in contrahendo (obligations in negotiation)
- Non-contractual liability
- Implied contract of information
- Fidelity liability (BGE 120 II 331; 121 III 350)
- Transfer default:
- If an adviser accepts a mandate but does not have the necessary specialist knowledge, he may not plead that he fulfilled the order to the best of his ability.
Prerequisites of liability
- Violation of duty:
- This mostly consists of non-observance of normal due diligence. The adviser must act with the due diligence of an ordinary businessman.
- Results from violation of duty.
- No limitation of liability:
- Exemption from liability for slight negligence is acceptable in principle. However, whether this also applies to contract law is disputed (cf. BGE 124 III 155, 165).
- Compensation for losses suffered due to the investment (including ancillary costs) and loss of profit from lost business; if necessary the customer must allow for the benefits/profits achieved in the context of the same advice.
- Problem of legitimate alternative performance, i.e. the loss would still have been incurred even if the explanation and advice had been correct.