Financial Investors as Consumers and Their Protection: Recent Italian Legislation from a European Perspective

Abstract

The present paper is firstly concerned with protections of investors in the Italian legislation and within a European context. Part I shall discuss in detail the definition of ‘investors’ as consumers in the European as well as in the Italian legislation. Part I shall therefore provide the reader with sufficient constructive elements in order to understand the present inconsistencies of definitions that instead deserve the utmost attention at both European and national levels. Secondly, in contrast with a legislative policy that seems to encourage recourse to private remedies, the argument supported in Part II of this paper questions the effectiveness of excessive private remedies if they are not buttressed by a consistent and rational framework. After dealing with the Italian offer of out-of-court settlement procedures (guarantee indemnification funds; no-fault funds) and collective redress procedures (collective injunctions; damages class actions; compulsory settlement), the argument put forward in Part II of this paper is that private remedies and access to justice lack clarity and are still excessively complex. An efficient protective system should first seriously enforce public remedies available (criminal sanctions and fines); secondly, it should simplify remedies and access to justice through the establishment of a hierarchy of remedies mandatory settlement attempts should come first, leading to an indemnity guarantee and excluding other ordinary suits. Only in case of failure an ordinary lawsuit may then be brought, either via individual actions or through class actions for damages, leading eventually to the awarding of economic damages. Last: access to indemnity funds should be permitted only in cases of defendant insolvency.

Keywords: Financial Investors, Consumers, Italian Legislation, European Legislation, Indemnification Fund, Collective Injunction, Damages Class Action

JEL Classification: K22, K12