Analysis of the frequent legal issues regarding preferred shares based on the judgments of the Spanish Supreme Court dated on April 18th 2013 and September 8th 2014, and case law from Provincial Courts

Abstract

This article analyzes the Spanish Supreme Court judgments issued in relation to lawsuits on preference shares. Some conclusions can be drawn from to them such as the notion of some distinctive features of preferred shares, the exist- ence of a strict information obligation on sellers of such products regardless of the transposition of MIFID or the recognition that an obligation to pay damages or that a mistake in consent can arise out of the infringement of the task to inform clients. In these judgments it is further clarified the legal assessment of some circumstances in order to determine the existence of a mistake, such as the participation of client advisors in the operation.

However, both judgments are inconsistent regarding the applicability of MIFID before its transposition in Spain. On this issue there is inconsistent case law from Provincial  Courts.

Both  judgments  do not  address several  legal  issues  of this  kind  of disputes such as the limitation statute, joinder of actions, the competence of administrative courts, the criterion to determine damages or the amount  to be paid pursuant  the article  1303 of the  Spanish  Civil  Code. These issues  have  been addressed by case law from lower courts and are briefly discussed in this article.