The case in the background of the judgment here in comment is the one related to a bond issue structured as follows:

  1. the issuer places its bonds to institutional investors (placement phase);
  2. the financial intermediary (e. the bank) subscribes the bond issue;
  3. the retail client purchases the bonds from the financial intermediary (negotiation phase).

Some possible claims of unlawfulness could emerge in the phase so called of “grey market”, i.e. wherever the financial intermediary purchases the bonds to retail customers prior to their official public offer. Such claims concern both the vagueness of the purchase contents and the breach of transparency law dispositions set out by the Italian Finance Services Act (so called “TUF”).

With respect of the first issue, the previous case-law was basically divided between the one that considered the purchase made during the grey market phase fully force and effective (see, among others, Court of Verona, March 10, 2011; Court of Modena, January 10, 2008; Court of Rome, October 8 2004) and the one that considered such agreement null and void because of the vagueness of its contents: indeed, the circumstance that the purchase was concluded before the bonds official public offer prevented the client to identify the main features of the financial product and, thus, breaching the disposition set out by Article 1325 of the Italian Civil Code (see, inter alia, Court of Milan, October 25, 2006; Court of Palermo, January 14, 2010).

As it regards the second issue, the applicants argued that the breach, by the bank, of its disclosure and transparency obligations (that has to be fulfilled both in the phase preceding to the agreement and during the contractual relationship, and that concern, in particular, the appropriateness of the investment in respect of the risk profile declared by the client) effects the validity of the agreement, constituting a breach of strict mandatory rules and, as a consequence, causing the nullity of the agreement pursuant to Article 1418 of the Italian Civil Code.

The Supreme Court, first, addresses the issue of the vagueness of the purchase contents, primarily by detecting that the purchase made during the grey market phase could be included in the framework of the sale of prospective goods, clearly permitted in our legal system, in particular pursuant to Article 1472 ICC, and, therefore, it has to be considered force and effective. Furthermore, the Supreme Court observes that in the case at issue, even though the bonds purchase occurred prior to its official public offer, the features of such financial product (e.g. nature, maturity, rate of return and identification number) were identified and thus well known.

With respect of the nullity of the agreement because of breach of strict mandatory rules, the Supreme Court endorses the settled case-law of the United Sections of the Supreme Court which, already on 2007, ruled that the breach of law dispositions related to disclosure and transparency obligations cannot affect the nullity of the agreement, because despite such dispositions are strictly mandatory, they provide for the financial intermediary’s conduct during the execution of the agreement and not for the formation phase of the agreement (Supreme Court SSUU no. 26724/2007). If anything, the breach of such law dispositions, could constitute a pre-contractual or a contractual liability of the financial intermediary, depending on whether the breach occurs in the preceding phase of the agreement or during its progress.