The prospectus directive : issues of liability, enforcement and collective redress

Abstract

This thesis explores the nationally fragmented areas of prospectus liability, collective redress and public enforcement. It examines the current EU scenario and proposes actions at the EU level in order to address the current shortcomings and attain a coherent and harmonised approach in relation to these three key interrelated issues. The relevant section on prospectus liability in the Prospectus Directive provides little scope for piloting a common approach across the EU and the Rome II Regulation is deemed to be inadequate to regulate the applicable law in a cross-border security claim thus a harmonized EU prospectus liability regime coupled with a uniform EU prospectus liability conflict-of-law rule are hereby proposed. An EU legislative initiative relative to collective redress in the field of financial services could ensure that the benefits associated with class actions are reaped all throughout the EU on an equal footing. The US model of having a detailed prospectus liability provision which is enforceable by means of a securities class action could be imported in the EU's legal system without transplanting the US class action attributes which are deemed to be incompatible with the EU's legal traditions. The dictates of investor protection requires not only that the law prescribes substantive requirements in order to ensure that accurate and complete information is provided to the investor in advance of the transaction but also that effective sanctions are in place for failures to comply with the duty to disclose information. The need for a harmonized sanctioning regime which draws on the best features of existing national sanctioning regimes is taken into consideration by way of analysis and proposition.