Pioneering Supreme Court ruling on Bankia's liability vis-à-vis institutional investors

Since the IPO of Bankia, S.A. (now CaixaBank, S.A.) and the subsequent restatement of its accounts, the question of whether qualified investors had standing to bring an action for damages and claim liability for inaccuracies in the prospectus, or whether such action was exclusively reserved for retail investors, has been a matter of considerable controversy and litigation. To date, the rulings of the Provincial Courts on this issue have been disparate.

In view of the heterogeneous nature of the rulings, the Supreme Court referred for a preliminary ruling in the Bankia, S.A. (now CaixaBank, S.A.) and Unión Mutua Asistencial Seguros (UMAS) case, which was decided by the Court of Justice of the European Union in its ruling of June 3, 2021 (Case C-910/19) (hereinafter, the “CJEU”).

The CJEU, first of all, after considering that the publication of the prospectus contributes to the protection of investors’ interests, considered it legitimate for investors who have participated in an offer of securities in which a prospectus has been published – which is understood to contain reliable and complete information – to invoke the information contained therein and, consequently, to be entitled to bring a liability action for that information regardless of whether or not they had been recipients of the prospectus in question. Otherwise, it would be contrary to the objectives pursued by the legislation regulating the matter to exclude qualified investors from the exercise of the liability action by basing such exclusion on the non-requirement of publication of the prospectus when the offers are exclusively addressed to them; since the non-obligatory nature of publishing the prospectus in such cases is an exception and not a prohibition for the prospectus to be published and addressed to all investors. Therefore, the principle of civil liability prevails in the case of an inaccurate prospectus, regardless of the status of the injured investor.

Secondly, the CJEU, after stressing the need for the principles of equivalence and effectiveness to be respected in all cases, considers that, in the event that the action for liability for the information in the prospectus is brought by a qualified investor, the knowledge of the economic situation of the issuer that the qualified investor has (or should have) on the basis of its relations with the issuer may (or should have) be taken into consideration, if the national legislation in question so provides.

Following the CJEU, on December 21, the Supreme Court issued Ruling No. 890/2021 confirming Bankia’s liability towards a qualified investor, due to the content of the prospectus published in its IPO of shares, taking into account that the investor did not have access to any other information on the true economic situation of Bankia. In this case, since it was an IPO, we are dealing with shares with no prior trading history, which makes it difficult to find any other source of knowledge apart from the prospectus that did not come from the issuer’s internal sphere. With this pronouncement, the Supreme Court, taking up the thesis of the CJEU, definitively sets the path for future rulings.