Nullity of Barclays Bonds in the Supreme Court

Bonos Barclays

To the Supreme Court, the information deficit on the Barclays Bonds was not made up by the professional entrepreneur's qualification

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This was decided by the Civil Chamber of the Supreme Court in Judgment 204/2018 of 11 April, which confirmed the nullity of some exchangeable Bond purchase contracts signed with Barclays Bank.

Antecedentes

The 14 and 30 March 2007 D. Maximino celebrated with Barclays Bank the acquisition of self-canceling structured bonds (Barclays Bonds), at the maturity of which the loss of the investment made for the client was produced.

The bank did not previously deliver the information brochures on the characteristics and operation of the product., neither did the purchase orders of the bonds have information of their characterization, operation and risks.

D. Maximino sued the bank requesting the nullity or voidability of the contracts for the purchase of financial products due to an error in the consent given.

First and Second Instance

The Court of First Instance No. 5 of Pamplona sentenced the 7 May 2013 where he declared void the purchase contracts of derivative financial instruments (Barclays Bonds) by mistake vice in the consent given.

The Court understood that the entity breached its proactive obligation of information, in particular on the consequences of settlement to maturity of products.

The defendant filed an appeal against the first instance decision and the Provincial Court of Navarra in the judgment of 1 September 2014, upheld the appeal and dismissed the claim filed by S in its entirety. Maximino.

The Hearing argued that the plaintiff was a highly qualified professional businessman, head of a company dedicated to food, therefore, the bank's information deficit was overcome if it had acted with minimal diligence.

Casación

D. Maximino filed an appeal in cassation against the second instance sentence for violation of the Securities Market Law and cassation interest for opposition to the doctrine of the Supreme Court.

The issue resolved by the Chamber on this occasion was the nullity of the acquisition of the structured bonds due to a defect in the consent given.

The bank did not comply with the information duties due to the nature of the products offered. And the duty of information cannot be supplemented by the qualification of the entrepreneur since his profile was very far from that of an expert investor with the financial knowledge required for his diligence to allow him to carry out a detailed study of the consequences., thus, the bank cannot be exempted from offering sufficient information.

The Chamber then concluded that the information deficit was "decisive both for the appreciation of the error and vice of the consent given, as for the excusability of the error suffered by the client in the contracting of these financial products.

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