Information for investors

Compensation proceedings

In the meaning of the Investor Compensation Act [klick here] (AnlEntG - Anlegerentschädigungsgesetz; formerly EAEG - Einlagensicherungs- und Anlegerentschädigungsgesetz), EdW gives eligible claimants financial compensation in the event that the "Federal Financial Supervisory Authority" (BaFin - Bundesanstalt für Finanzdienstleistungsaufsicht) determines that an institution is unable for reasons directly related to its financial position to repay deposits or to meet obligations from securities transactions and that there are no prospects for later repayment or performance.

Securities transactions in the meaning of the AnlEntG are bank operations or financial services in the meaning of Article 1, paragraph 1, sentence 2 No 4 (financial commission operations), No 5 (deposit transactions), No 10 (issuing operations) or paragraph 1, sentence 2, Nos. 1 to 4 (investment brokerage, arrangement of transactions, financial portfolio administration, trading for own account) of the Banking Act (KWG – Kreditwesengesetz).

Obligations from securities transactions as defined in the AnlEntG are obligations of an enterprise under securities transactions to procure for a customer ownership or property of moneys or financial instruments or rights from financial instruments in the meaning of Article 1, paragraph 11 of the KWG.

The BaFin establishes the event of loss and immediately informs the Compensatory Fund. The event of loss is published in the Federal Bulletin.

The Compensation Fund informs all investors known to it of the event of loss. Investors have to file their written application for compensation with the Compensation Fund within one year of receiving the notice of the event of loss. After this period, claims for compensation are generally excluded. After five years the claim of the party entitled to compensation is extinguished by limitation. Any disputes regarding the grounds for and the level of the compensation claim are to be settled in courts of civil jurisdiction.

Pursuant to § 3 Section 2 of the AnlEntG certain groups of persons and institutions are not entitled to claims for compensation. These are:

  • Institutions in the meaning of § 1 Section 1 No. 1 of the AnlEntG and financial institutions in the meaning of Article 1 No. 6 of Directive 89/646/EEC of the Council of December 15, 1989 for the Coordination of Legal and Administrative Dispositions on the Start-up and Execution of the Operation of Credit Institutions and for the Amendment of Directive 77/780/EEC (OJ EC No. L 386 p. 1) with their seat in Germany and abroad, provided they operate on their own behalf and for their own account,
  • Private and public-law insurance companies with their seat in Germany and abroad,
  • Capital investment firms, including the special funds administered by them, or investment funds by shares or organisms for joint investments with their seat abroad,
  • The Federal Republic, a federal Land, a legally dependent special fund of the Federal Republic or of a Land, a municipal authority, another state or a regional government or a local government authority of another state,
  • Managers, personally liable partners or members of supervisory boards of the institution, persons holding at least 5% of the capital of the institution, auditors in the meaning of § 28 of the Law on Banking and creditors who hold a corresponding position or function in an enterprise that forms a group with the institution in the meaning of § 18 of the Law on Stock Corporations without regard for the legal form,
  • Spouses and relatives once or twice removed of the persons referred to under e), unless the deposits, monies or financial instruments stem from the spouses' or relatives' own assets,
  • Enterprises forming a group with the institution in the meaning of § 18 of the Law on Stock Corporations without regard to the legal form,
  • Creditors that have produced or taken advantage of circumstances in the institution, especially if they have received high interest payments or financial benefits on the basis of individually negotiated arrangements, that have caused the financial difficulties or have contributed significantly to the worsening of the financial position of the institution,
  • Incorporated companies in the meaning of § 267 paras 2 and 3 HGB and comparable enterprises with seat abroad,
  • Creditors whose claims against the institution are related with operations on the basis of which any persons have been finally convicted in criminal proceedings for money laundering in the meaning of Article 1 of Directive 91/308/EEC of the Council of June 10, 1991 on the Prevention of the Use of the Financial System for the Purpose of Money Laundering (OJ EC No. L 166 p. 77).

The claim for compensation of the creditor is based on the amount of the creditor's deposits or claims from securities transactions in consideration of any offsetting or retention rights of the securities trading firm. A claim for compensation shall exist only to the extent that deposits or moneys are denominated in the currency of a member state of the European Union or in EUR. Thus, deposits and moneys denominated USD or CHF will not be compensated. In addition, no claim for compensation exists if your claim is based on faulty advice or collusive investment within the framework of property management.

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