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Clifford Chance

Clifford Chance


New Information and Disclosure Requirements for Banks in Relation to Spread Ladder Swaps - March 2011

28 March 2011

Germany's highest court in civil matters, the Bundesgerichtshof, has decided on information and disclosure requirements for banks in connection with CMS spread ladder swaps. The BGH deviated from the decisions of the first and second instance and decided that the bank had violated its information and disclosure obligations and awarded damages. In its decision, the BGH stipulated that in connection with highly complex and highly risky products the bank had to satisfy corresponding high standards in order to discharge its duty of care under the investment advisory agreement. Accordingly, the BGH defined new requirements for information obligations which a bank owes to its customers when recommending CMS spread ladder swaps. The newsletter summarises the new BGH decision and discusses its implications.

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