With the ordinance n. 19104 of 6 July 2023, the Supreme Court of Cassation reiterated the principle wherein it is the financial intermediary who has the principal obligation to provide the customer (or more correctly: The Investor) with detailed, specific and preventive information regarding the securities which are the object of the investment.
More precisely, an unqualified investor must be made aware of the nature of the securities and the characteristics of the issuer. This way, whenever disclosure obligations are inadequate with respects to both the nature of the transaction and the investor, it constitutes a penalizable breach and any assessment regarding the adequacy of the investment becomes irrelevant.
To sum up, even if the intermediary deems the operation as adequate, he must always provide the Non-Professional investor with all the information required by art. 28, paragraph 2 of Consob Regulation no. 11522 of 1998, as only in this way can informed investments be carried out.
A failure by the intermediary in complying with specific information obligations will have the effect of disorienting the investor, who will then not be in a position to make informed investment or divestment decisions.
It is therefore important that the intermediary – based on the investor’s risk profile – furnishes adequate information regarding the characteristics of the transaction, including those relating to the default risk of the issuer.
Consequently, the information must not refer to the general risks of investing in securities but must of necessarity refer to the specific security that the investor is preparing to purchase.
Basically, in the field of financial intermediation, the information obligations imposed on the intermediary must not be generic and, in cases where bonds of a foreign state are being purchased, the intermediary is obligated to provide detailed information on the States degree of insolvency risk which are derived from the conditions and future prospects of the Issuer , which must be updated in the instant in which the operation was completed.