Hostname: page-component-7bb8b95d7b-l4ctd Total loading time: 0 Render date: 2024-09-18T23:22:35.186Z Has data issue: false hasContentIssue false
  • English
  • Français

Understanding Director & Officer Liability in Germany For Dissemination of False Information: Perspectives From An Outsider

Published online by Cambridge University Press:  06 March 2019

Patrick S. Ryan

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

This essay deals with the topic of director & officer liability for the dissemination of false information in Germany in the form of ad-hoc disclosures. From the perspective of an American trained attorney, it is surprising to note that there is, to date, very little – quite possibly zero – real personal civil liability in this area for directors & officers of publicly traded companies, however limited criminal sanctions do exist. The essay discusses the lawmaking which is underway in Germany to increase civil liability. After a review of the laws which govern the dissemination of false information, the essay reviews five German cases: Infomatec, EM.TV, Metabox, Comroad and Deutsche Telekom as examples of cases where criminal sanctions for management appear to be much more likely than civil liability.

Type
Private Law
Information
German Law Journal , Volume 4 , Issue 5 , 01 May 2003 , pp. 439 - 475
Copyright
Copyright © 2003 by German Law Journal GbR 

References

1 Ferrara, Donna, Protecting Your Decision-Makers Abroad: A Few Issues On Global Protection, 15 No. 2 Andrews Corp. Off. & Directors Liab. Litig. Rep. 15 (22 Nov. 1999). (This is an excellent normative article on the legal issues of risk insurance. The author notes that until recently, European mangers who had responsibilities in the U.S. saw no need for insurance. This trend has reversed.)Google Scholar

2 Section 15 WpHG provides full details on the requirements of the ad-hoc disclosure.Google Scholar

3 See generally, Reiman, Mathias, Nineteenth Century German Legal Science, 31 Boston College Law Review 837 (July 1990); Also see, Joachim J. Savelsberg, The Making of Criminal Law Norms in Welfare States: Economic Crime in West Germany, 21 Law & Society Rev. 529 (1987).Google Scholar

4 Savelsberg, cited supra, at p. 530 (Discussing the impact of Weber, Haferkamp, Turkel and others on modern economic criminal law in Germany).Google Scholar

5 See Section 64 Paragraph 1, GmbHG (Sanctions for not reporting certain bankruptcy events on time); Sec. 283 StGB (Certain conditions in the Criminal Code which create personal criminal liability for CEOs).Google Scholar

6 Shusterman, Richard M. & Bortnick, Richard J., Insurance: Foreign Courts Will Follow US On D&O, 40 Int'l Com. Litig. 30 (1 May 1998). (Noting D&O policies generally do not cover corporations and that special arrangements have to be made in co-defense suits).Google Scholar

7 Public Law 107-204, July 30, 2002 (H.R. 3763).Google Scholar

8 Donald, David C., Some Observations on the Use of Structural and Remedial Measures in American and German Law After Sarbanes-Oxley, 4 German L.J. 2 (1 Feb 2003) at Para. 7 ff., www.germanlawjournal.com. (Noting the affects of German law on U.S. legislation in the context of Sarbanes-Oxley).Google Scholar

9 See Kenny, Patrick, Corporate Governance in the U. S.: Post-Enron, 4 German L.J. 1 (1 Jan 2003)Google Scholar

10 See generally, Investor self-protection, The Economist, 28 Nov 2002.Google Scholar

11 See Gordon, Jeffrey N., Deutsche Telekom … cited infra.Google Scholar

12 See The rise and the fall, The Economist, 3 May 2001 (Noting that in spite of market drops there are trends indicating a permanent rise in equity culture worldwide).Google Scholar

13 Note that MobilCom is presently under investigation by the European Commission for state subsidies due to overbidding of UMTS licenses – for which it paid $7.5 billion – a market which it has recently decided to abandon see Patrick S. Ryan, The court as a spectrum regulator: will there be a European analogue to U.S. cases NextWave and GWI?” 4 German L.J. 2 (1 Feb. 2003), www.germanlawjournal.com.Google Scholar

14 After greed, fear, The Economist, 23 May 2002.Google Scholar

15 Ascarelli, Silvia and Sims, G. Thomas, German Exchange Unplugs Neuer Markt, Wall Street Journal, 27 Sep. 2002 at p. A12.Google Scholar

16 See, for example Kueppers, Alfred, Germany's Revision of Securities Law Might Fall Short, Wall Street Journal Europe, 2 Sep 2001 at p. 15; also see, Anke Fricke, Wie bringt man Vorständen Moral bei?, Faz.net [Frankfurter Allgemeine Zeitung Online], 17 Apr 2002; also see Peter O. Mülbert and Uwe H. Schneider, Kampf der Klage-Industrie, Handelsblatt, 14 Nov. 2002, at p. 10.Google Scholar

17 See articles by Rützel, and Maier-Raimer, cited infra.Google Scholar

18 See, for example www.sdk.org (Accessed 21 Mar 2003); But note that the influence of shareholder activists groups is still relatively small. See Theodor Baums & Rainer Schmitz, Shareholder Voting in Germany, Arbeitspapier Nr. 76 (No date available) Available: http://www.uni-frankfurt.de/fb01/baums/files/paper76.pdf (Accessed 21 Mar 2003) at p. 9 (Noting that shareholder activist groups in 1992 represented little over 1% of votes).Google Scholar

19 Press Release from the Bundesjustizministerium No. 10/03, cited infra.Google Scholar

20 Prospekthaftungsklagen bringen am meisten, Frankfurter Allgemeine Zeitung, 26 Feb 2003, Nr. 48 at p. 19Google Scholar

21 See generally, Holzborn, Timo and Eberhard, Martin, Schadenersatzpflichten von Aktiengesellschaften und deren Management bei Anlegerverlusten – Ein Überblick, Neue Juristische Wochenschrift, Heft 13, 2003 at 932. (For a comprehensive overview of the new laws and liabilities for damages. The article details the theoretical remedies for prospectus liability. I use the word “theoretical” because they are still untested).Google Scholar

22 Bishop, Joseph W. Jr., Sitting Ducks and Decoy Ducks: New Trends in the Indemnification of Corporate Directors and Officers, 77 Yale L.J. 1078, (1968) at 1099.Google Scholar

23 The term “incident” is used here instead of claims or lawsuits since payouts can take many forms, and in fact are settled out of court more often than in court. Therefore they are not always “cases” in the pure sense, and possibly not even “claims” since they may be settled in a pre-emptive manner before they take any formal shape.Google Scholar

24 See Stanford Securities Class Action Clearinghouse, available: http://securities.stanford.edu/index.html (Accessed 20 Mar 2003). Also see General CologneRe, Loss & Litigation Report: The New Spotlight on Directors & Officers in the EU (August 2001) at P. 3. [Hereinafter “CologneRe Report 2001”].Google Scholar

25 Id.Google Scholar

26 Stanford Securities Class Action Clearinghouse, cited supra.Google Scholar

27 See generally, Christopher Oster, Insurers Seek to Trim Their Exposure on Directors Policies, Wall Street Journal, 28 Jan 2003 (The article discusses the concept of the “severability feature” which provides an opportunity for insurers to sever insurance for certain cases of fraud. The article also notes that premiums are up 500% from a year ago.)Google Scholar

28 See The morning after, The Economist, 6 Feb 2003 (Stating that insurers were for many years over-invested in equities and did not properly attend to underwriting activities, a trend which is changing.)Google Scholar

29 The case for going private, The Economist, 23 Jan 2003.Google Scholar

30 Oster, Issuers Seek to Trim Their Exposure, cited supra.Google Scholar

31 Donna Ferrara, Protecting Your Decision-Makers Abroad: cited supra.Google Scholar

32 CologneRe Report 2001, at 3.Google Scholar

33 Id, at pp. 36 – 52.Google Scholar

34 Many documents and sources are available on the Cornerstone Research Securities Website, available: http://securities.cornerstone.com/ (Accessed 20 Mar 2003).Google Scholar

35 Weissbrod, Margaret L., Sanctions Under Amended Rule 26 – Scalpel or Meat Ax? 46 Ohio St. L.J. 183 (1985) at 183.Google Scholar

36 See Stahr, Walter B., Discovery Under 28 U.S.C. § 1782 For Foreign And International Proceedings, 30 Va. J. Int'l L. 597 (Discussing U.S. law and the Hague Evidence Convention and the many complications that arise from international litigation and discovery laws).Google Scholar

37 See generally, Weissbrod, cited supra; Also see John A. Demay, Discovery & Settlement: How to Win Your Case Without Trial (Prentice Hall, 1992). (A normative book on discovery tactics).Google Scholar

38 The many class action suits in the U.S. provide a useful illustration. The U.S. law firm of Milberg Weiss is one of the largest firms for class-action shareholder litigation in the U.S. Their website contains a host of information on ongoing lawsuits and settlements. Available, www.milberg.com (Accessed 20 Mar 2003).Google Scholar

39 Mihm, Andreas, Drei Jahresgehälter für eine Insolvenz, Frankfurter Allgemeine Zeitung, 13 Aug. 2002, Nr. 186, at 20 (Referring to a quote of the CEO of Bundesverband der Deutschen Industrie (BDI) regarding the passing of new laws in Germany. The BDI is a large industry lobby organization).Google Scholar

40 Mülbert and Schneider, cited supra.Google Scholar

41 Anleger sollen gemeinsam klagen können, Frankfurter Allgemeine Zeitung, 11 Dec 2002, Nr. 288, at 21. (Noting that Theodor Baums, head of the commission for corporate governance, is promoting a policy to allow shareholder class action suits).Google Scholar

42 Davis, W. Kent, The International View of Attorney Fees in Civil Suits: Why Is The United States The “Odd Man Out” In How It Pays Its Lawyers? 16 Arizona J. Of Int'l & Comp. L. 361 (Spring 1999) (For a comprehensive overview of the law regarding contingency fees in multiple countries).Google Scholar

43 Reitz, John C., Why We Probably Cannot Adopt the German Advantage In Civil Procedure, 75 Iowa L.Rev. 987 (May, 1990). (For an overview of prohibitions on discovery in Germany and numerous other procedural “obstacles” to litigation.)Google Scholar

44 Reforming German Corporate Governance: Inside a Law Making Process of a Very New Nature – Interview with Professor Dr. Theodor Baums, 2 German L.J. 12 (16 Jul. 2001), at Para. 30.Google Scholar

45 Dr. Baums has published extensively on the topic. See http://www.uni-frankfurt.de/fb01/baums/ (Accessed 10 Mar 2003).Google Scholar

46 Die Bundesregierung prüft weitere Rechte für geschädigte Anleger, Frankfurter Allgemeine Zeitung, 30 Jan 2001, Nr. 25, at 30. [Hereinafter “FAZ 30.01.2001”]Google Scholar

47 See Interview with Professor Dr. Theodor Baums, cited supra.Google Scholar

48 Kueppers, Alfred, Germans Look Longingly at SEC Model, Wall Street Journal, 6 Sep 2001, at A15.Google Scholar

49 The term “omnibus” is an approximation here: where an omnibus act is generally viewed an “all or nothing” tactic in the U.S., in Germany the comment and review process is somewhat more involved. These acts all share the core characteristic of an omnibus bill in the sense that they contain multiple substantive matters in one bill, and thereby amend many other laws upon its passing.Google Scholar

50 See Roquette, Andreas J., New Developments Relating To The Internalization Of The Capital Markets: A Comparison Of Legislative Reforms In The United States, The European Community, And Germany, 14 U. Pa. J. Int'l Bus. L. 565 (1994).Google Scholar

51 See Freis, James H. Jr., An Outsider's Look Into the Regulation of Insider Trading in Germany: A Guide to Securities, Banking, and Market Reform in Finanzplatz Deutschland, 19 Boston College Int'l & Comp. L.R. 1 (1996). (An extremely comprehensive discussion of the German financial system through the 2nd FMFG). Also see Ursula C. Pfeil, Finanzplatz Deutschland: Germany Enacts Insider Trading Legislation, 11 Am. U. J. of Int'l Law & Policy 137 (1996).Google Scholar

52 See Thoma, Georg F., Steck, Kai-Uwe, The German Investmentaktiengesellschaft (Closed-End Fund): Investment Alternative or Legislative Failure? 23 U. Pa. J. Int'l Econ. L. 25 (Spring 2002); Also see Thomas J. Andre, Jr., Cultural Hegemony: The Exportation of Anglo-Saxon Corporate Governance Ideologies to Germany, 73 Tulane L. R. 69 (1998).Google Scholar

53 See German government publication, available: http://www.bundesfinanzministerium.de/Anlage10423/Draft-of-a-Fourth-Financial-Market-Promotion-Act.pdf (Accessed 19 Mar 2003).Google Scholar

54 A very detailed overview is provided by Bernd Rudolph, Viertes Finanzmarktförderungsgesetz – ist der Name Programm? Betriebs-Berater Nr. 57, Heft 20 (15 May 2002), at pp 1036 – 1041.Google Scholar

55 Roth, Terrence, Scandals Spur Moves in Germany for Laws to Battle Insider Trading, Wall Street Journal, 20 Sept. 1001 at A5A.Google Scholar

56 Council Directive 89/592 of 13 November 1989 Coordinating Regulations on Insider Dealing.Google Scholar

57 See generally, Krause, Hartmut, The German Securities Trading Act (1994): A Ban On Insider Trading And An Issuer's Affirmative Duty to Disclose Material Nonpublic Information, 30 International Lawyer 555 (1994).Google Scholar

58 WpHG, Section 14.Google Scholar

59 Article 6 of the EC Directive allows countries to adopt standards which are stricter than those proscribed by the Directive.Google Scholar

60 The BSK is a committee (called “Commission of Exchange Experts” in English) and is comprised of members of industry, shareholder groups and many factions which advises the government on capital market legislation. See www.codex.de (Accessed 14. Mar. 2003). For a sample report (English) see http://deutsche-boerse.com/INTERNET/EXCHANGE/inside/BSK-Report_ATS_May2001.pdf (Accessed 5 Apr 2003).Google Scholar

61 See generally, Weber, Martin, Deutsches Kapitalmarktrecht im Umbruch, Neue Juristische Wochenscrift (1994) 2849, at 2851.Google Scholar

62 See Rützel, Stefan, Der aktuelle Stand der Rechtsprechung zur Haftung bei Ad-hoc-Mitteilungen, Die Aktiengesellschaft, Nr. 2/2003, at 70 [Hereinafter “Rützel, AG”] (For a discussion on contractual and quasi-contractual claims for ad hoc disclosures).Google Scholar

63 Maier-Reimer, Georg and Webering, Anabel, Ad hoc-Publizität und Schadenersatzhaftung, 37 Wertpapier-Mitteilungen 1857 (14 Sep 2002) at p 1857 [Hereinafter “Reimer/Webering, WM”].Google Scholar

64 General comment: all translations in this essay are author's translation unless otherwise stated.Google Scholar

65 See section in this essay dedicated to Infomatec, infra.Google Scholar

66 Legislative history is available online (in German) at http://www.parlamentsspiegel.de/ (Accessed 20 Mar. 2003).Google Scholar

67 WpHG, Section 13.Google Scholar

68 Reimer/Webering, WM, cited supra, at p. 1858.Google Scholar

69 Id., at 1858.Google Scholar

70 Id.Google Scholar

71 Id., at 1864.Google Scholar

72 Id.Google Scholar

73 Rützel, AG, cited supra, at 79.Google Scholar

74 Reimer/Webering, WM, cited supra, at p. 1864.Google Scholar

75 Rützel, AG, cited supra, at 79.Google Scholar

76 Press Release 10/03, 25 Feb 2003, entitled Federal Government to improve investor protection and corporate integrity Accessible: http://www.bundesjustizministerium.de/ [Hereinafter “February 2003 Press Release”] (Accessed 14 Mar 2003). German version entitled Bundesregierung stärkt Anlegerschutz und Unternehmensintegrität available: http://www.bmj.bund.de/ger/themen/wirtschaft_und_recht/10000668/?sid=72029842aa10e8b52d160 5b9b2f82a61 (Accessed 8 Apr 2003).Google Scholar

77 February 2003 Press Release, cited supra.Google Scholar

78 Id., at Point 2 ff.Google Scholar

79 Id.Google Scholar

80 Id., at Point 10 ff.Google Scholar

81 Pressemitteilung Nr. 48/02 vom 28 Aug 2002, 10-Punkte-Programm für Unternehmensintegrität und Anlegerschutz at Paragraph I. Available: http://www.bmj.de/ger/service/pressemitteilungen/10000601/ (Accessed 4 Apr 2003).Google Scholar

82 See generally, Nachrichten in Kürze: Infomatec AG, Augsburg, Frankfurter Allgemeine Zeitung, 17 Feb 2003, Nr. 40, P. 18 (Hereinafter “FAZ 17.02.2003”)Google Scholar

83 See Maurer, Andreas, More Victims of the New Economy: Ad Hoc-Publicity and Protection of Shareholders, 2 German L.J. 16 (1 Oct. 2001), www.germanlawjournal.com (Hereinafter, “Maurer, More Victims …) Google Scholar

84 The ad-hoc disclosure is governed by Section 15 WpHG. In 15 WpHG (3) the details of where an ad-hoc disclosure is to be published are detailed (i.e. either through a nationwide stock exchange bulletin, or electronically through the national financial information exchange system). Also see generally, Rätselraten um neue Ad-Hoc-Haftung, Frankfurter Allgemeine Zeitung, 5 Jul 2002, Nr. 153, at 21.Google Scholar

85 See Informatec AG verbreitete falsche Erfoglsmeldung, Heise Online, 17 Aug 2000, Available: http://www.heise.de/newsticker/data/axv-17.08.00-002/ (Accessed 13 Mar 2003) (Herienafter “Heise, 17.08.2000”).Google Scholar

86 Maurer, More Victims, cited supra.Google Scholar

87 Heise, 17.08.2000 cited supra.Google Scholar

88 A copy of the original press release is downloadable (payment required) at www.manager-magazin.de/geld/artikel/0,02828,148660,00.html (Accessed 14 Mar 2003).Google Scholar

89 One prosecutor, Klaus Rotte, represented at one time “about 200 other Infomatec shareholders” and was using the claim in Infomatec as a test ballon for other claims. See Helen Sommerville, German Investors Could Win Gains on Infomatec Case, Wall Street Journal Europe, 25 Sep 2001 at p. 11.Google Scholar

90 AZ: 3 0 4995/00, Landegricht Augsburg (hereinafter “Infomatec”), Available at the court website: http://www.justiz-augsburg.de/lg/infomatec02.htm (Accessed 7 April 2003).Google Scholar

91 Oberlandesrichter weisen Anlegerklage gegen Infomatec ab, Frankfurter Allgemeine Zeitung, 2 Oct 2002, Nr. 229, at 27 (Hereinafter “FAZ 02.10.2002”). (Noting that the investor was a butcher).Google Scholar

92 AZ: 3 0 4995/00, “Facts” section, Para. 3.Google Scholar

93 The plaintiff claimed under Section 400 AktG, Section 88 BoersenG, Section 15 WpHG, Section 3 UWG as well as Sections 823(2) and 826 BGB.Google Scholar

94 See generally, Maurer, More Victims, cited supra at Paragraph 6 ff. Also, recall the explanation of the need for a “protective law” noted above in Section 4.4.3.Google Scholar

95 See Palandt Bürgerliches Gesetzbuch, 62nd Edition (2003), Thomas, § 823, Section 140 f.Google Scholar

96 Translation taken from Maurer, More Victims, cited supra.Google Scholar

97 Infomatec, cited supra. See also Maurer, More Victims, cited supra.Google Scholar

98 Id.Google Scholar

99 Rützel, cited supra, at p. 74.Google Scholar

100 Section 826 BGB's title is: “immoral intentional conduct.”Google Scholar

101 Negligence is allowed under Section 823. Also see criminal code Section 15 StGB, which requires a proving of intent, unless another [criminal] law specifically allows for punishment based on negligence. The 4th FMFG allows for “gross negligence,” but this may not be very helpful. (See Rützel, cited supra, at pp. 78–79).Google Scholar

102 See LG Augsburg, Urteil vom 9 Jan 2002, 6 O 1640/01, Die Aktiengesellschaft [AG] 2002, at pp. 265–466.Google Scholar

103 Infomatec, cited I supra. Note that a “Rahmenabkommen,” or “Frame Agreement,” are contracts which are often entered into in German business practice. While a Frame Agreement sets forth general terms and conditions for further business engagements, these agreements can range widely in scope; some list general terms and conditions. Others are specific in quantity and sum.Google Scholar

104 Infomatec, cited supra, at Numbered Para 1, section entitled “Entscheidungsgründe.”Google Scholar

105 Infomatec, cited supra, at Numbered Para 4, first sentence, section entitled “Entscheidungsgründe”.Google Scholar

106 Rützel, cited supra, at p. 72 (see Rützel's fn. 31 for an extensive list of German jurisprudence demonstrating a contrary view).Google Scholar

107 Infomatec, cited supra, at Numbered Para 1, last sentence, section entitled “Entscheidungsgründe”.Google Scholar

108 Infomatec, cited supra, at Numbered Para 5, last three sentences, section entitled “EntscheidungsgründeGoogle Scholar

109 Maurer, More Victims, cited supra. (Noting almost immediately after the decision that the lower court was swimming upstream and that appeal was probable).Google Scholar

110 Thümmel, Roderich C., Haftung für geschönte Ad-hoc-Meldungen: Neues Risikofeld für Vorstände oder ergebnisorientierte Einzelfallrechtsprechung? 44 Der Betrieb 2331 (2001) at 2334. (Note that this article was also cited by the court at the appeal).Google Scholar

111 Reiman, Mathias, Nineteenth Century German Legal Science, 31 Boston College L. Rev. 837 (July 1990) (For an excellent overview of German jurisprudential history and decision making science). Also see, James E. Herget and Stephen Wallace, The German Free Law Movement as The Source of American Legal Realism, 73 Virginia Law Review 399 (March 1987) (For a comparison of German legal science and its influence on the American system).Google Scholar

112 FAZ 02.10.2002, cited supra.Google Scholar

113 LG Augsburg, decision of 9 Jan 2002, cited supra.Google Scholar

114 For a summary of the decision, see Keine Haftung des Vorstandes für falsche Ad-hoc-Mitteilungen, Die Aktiengesellschaft, Nr. 8/2002, at pp. 465–466 (Hereinafter “AG 8/2002”)Google Scholar

115 AG 8/2002, cited supra, at p. 466.Google Scholar

116 OLG München: Az: 30 U 855/ 01 at pp. 16–17 (Section “Entscheidungsgründe” Para. 2(a)(1)ff). Full text available at a law firm website: http://www.rotter-rechtsanwaelte.de/urteil.htm (Accessed 7 April 2003).Google Scholar

117 FAZ 02.10.2002, cited supra Google Scholar

118 Id.Google Scholar

119 Clemens von Frentz, Schwindel schon beim Börsengang?, Manager-Magazin.de, 13.02.2003, Available: http://www.manager-magazin.de/geld/artikel/0,2828,195076,00.html (Accessed 13 Mar 2003) (Herienafter “von Frentz, 13.02.2003”)Google Scholar

120 Id.Google Scholar

121 Staatsanwalt überprüft Infomatec, Frankfurter Allgemeine Zeitung, 9 Sep 2000, Nr. 201, at 21.Google Scholar

122 Polizei durchsucht Büros von Infomatec, Frankfurter Allgemeine Zeitung, 14 Oct. 2000, Nr. 239, at 16.Google Scholar

123 See FAZ 17.02.2003 cited supra.Google Scholar

124 See generally, Die Richterin und zwei Lenker, Süddeutsche Zeitung, 5 Nov 2002, at 3Google Scholar

125 Stoff, Stoff, Stoff, Süddeutsche Zeitung, 31 Oct 2002, at 34. (noting that EM.TV's IPO to the Neuer Markt was completed on 30 October 1997).Google Scholar

126 Selling yourself, The Economist, 9 Mar 2000 Google Scholar

127 Mit einer Beteiligung in Amerika sieht sich EM-TV am Ziel, Frankfurter Allgemeine Zeitung, 25 Nov 1999, Nr. 275. at 30. (Noting the underwriting by West LB and the expansion plans to the U.S.)Google Scholar

128 Selling yourself, cited supra. Also see Thane Peterson, The Cartoon King, BusinessWeek Online, 10 May 1999. Available: http://www.businessweek.com/1999/99_19/b3628009.htm (Accessed 7 Apr 2003) (Note that the BusinessWeek article was part of a cover story feature on Haffa, and paints an extremely extravagant lifestyle for the Haffa brothers. Thomas Haffa's stated intention was “to be a media baron” and states that at the time because of the stock price his personal net worth was approximately $2.6 billion).Google Scholar

129 Boudette, Neal E., Muppet Meltdown, Wall Street Journal, Jan 18, 2001 at A1.Google Scholar

130 Kapitalvernichtung in Rekordtempo, Manager-Magazin.de, 21 Jan 2003, Available: www.manager-magazin.de/geld/artikel/0,2828,147003,00.html (Accessed 8 Apr 2003). Also see, Hat haffa gegen Börsenprospekt verstoβen? Frankfurter Allgemeine Zeitung, 30 Dec 2000, Nr. 303, p. 18. (Noting that the agreement with WestLB required notification and approval of any share sales, and Haffa did not consult with WestLB prior to selling shares.)Google Scholar

131 Orwall, Bruce, Former Viacom Executive Moves To Buy Muppets From EM.TV, Wall Street Journal, 26 Dec. 2002 at A10Google Scholar

132 Id. Also see, Kapitalvernichtung in Rekordtempo, cited supra Google Scholar

133 Kapitalvernichtung in Rekordtempo, cited supra. (Noting that Haffa received 40 million DM from the sale).Google Scholar

134 See Hat Haffa gegen Börsenprospekt verstoβen?, cited supra. (Noting that Haffa earned approximately 20 million EUR from the sale).Google Scholar

135 Ewing, Jack, The Neuer Markt Needs A Watchdog With Teeth, BusinessWeek Online, 8 Jan 2001. Availiable: http://www.businessweek.com/2001/01_02/b3714251.htm (Accessed 5 Apr 2003).Google Scholar

136 EM.TV startet auch im neuen Jahr mit kräftigem Wachstum, Frankfurter Allgemeine Zeitung, 8 Jun 2000, Nr. 132, p. 20 (Noting continued growth, ongoing reassurances by Haffa, and plans for further expansion abroad.)Google Scholar

137 Ascarelli, Silvia, Money Talks (A Special Report), Wall Street Journal Europe, 14 Jun 1999 at R2.Google Scholar

138 See Eisinger, Jesse, Recent Deals Have Worried Investors Watching EM.TV, Wall Street Journal Europe, 21 Jul 2000, at 13 (Noting doubts about the synergy of Formula One with other acquisitions and criticisms about the purported growth rates of EM.TV's business); also see, Jesse Eisinger, EM.TV Takes Hit Despite Increase In Sales and Profit, Wall Street Journal Europe, 28 Aug 2000, at 11 (Noting that reports of first half profits creat doubt and reassurances by EM.TV management do not seem make sense).Google Scholar

139 Haffa-Brüder weisen Betrugsvorwurf zurück, Süddeutsche Zeitung, 5 Nov 2002 at p. 1.Google Scholar

140 Boudette, , Muppet Meltdown, cited supra.Google Scholar

141 Boudette, , Muppet Meltdown, cited supra. (Noting that Florian Haffa resigned on Dec. 4 2000. The article referred to story where Florian apparently could not answer basic questions to stock analysts: “for instance, EM.TV's 1999 cash flow was a negative $245 million, according to figures from Morgan Stanley Dean Witter & Co., but when asked when EM.TV would have positive cash flow, he looked to his brother and said ‘I think we already are.'”).Google Scholar

142 Kapitalvernichtung in Rekordtempo, cited supra. Also see Haffa-Brüder weisen Betrugsvorwurf zurück, cited supra (noting that the criminal investigation lead to the first criminal prosecution of managers in the Neuer Markt).Google Scholar

143 Florian Haffa resigned on Dec. 4, 2000. See Boudette, Muppet Meltdown, cited supra.Google Scholar

144 EM.TV's high-speed crash, The Economist, 7 Dec 2000.Google Scholar

145 EM.TV's EMP.TY coffers, The Economist, 3 May 2001.Google Scholar

146 Pressemitteilung der Staatsanwaltschaft München I, 6 Nov. 2001, Available http://www.rotter-rechtsanwaelte.de/em_tvPressemitteilungStA.htm (Accessed 8 Apr 2003).Google Scholar

147 German Prosecutors Wrap Up EM.TV Trial, Yahoo! News, 7 Apr 2003. Available: http://story.news.yahoo.com/news?tmpl=story&u=/ap/20030407/ap_en_bu/em_tv_trial_4 (Accessed 8 Apr 2003).Google Scholar

148 Haffa-Brüder nach Urteil “fassungslos”, Handelsblatt Online, 8 Apr 2003, Available: www.handelsblatt.de (Accessed 8 Apr 2003).Google Scholar

149 Staatsanwalt fordert für die Haffas eine Bewährungsstraffe, Frankfurter Allgemeine Zeitung, 8 Apr 2003, Nr. 83, at 20.Google Scholar

150 Haffa-Brüder nach Urteil “fassungslos”, cited supra.Google Scholar

151 Haffa-Brüder nach Urteil “fassungslos”, cited supra.Google Scholar

152 Anlegerschützer jubeln über das Urteil und hoffen auf Schadenersatz, Handelsblatt, 9 Apr 2003 at p. 16.Google Scholar

153 German Prosecutors Wrap Up EM.TV Trial, cited supra.Google Scholar

154 Note that copies of the judgement (rendered 8 Apr 2003) were not available at the time of this article. References to the judgment are as reported in the press.Google Scholar

155 Staatsanwalt fordert für die Haffas eine Bewährungsstraffe, cited supra.Google Scholar

156 Anlegerschütze jubeln, cited supra.Google Scholar

157 Anlegerschütze jubeln, cited supra.Google Scholar

158 Anlegerschütze jubeln, cited supra.Google Scholar

159 Geprellte EM.TV-Aktionäre hoffen jetzt auf Schadenersatz, Handelsblatt, 9 Apr 2003, at p. 1. (Conveying a comment by German securities specialist Hanno Merkt of the Bucerius Law School in Hamburg that a criminal judgement is not a guarantee for civil liability).Google Scholar

160 Maximilian Steinbeis, Haffa-Urteil Ruiniertes Brüderpaar, Handelsblatt, 9 Apr 2003 at p. 7.Google Scholar

161 Press Release from the Bundesjustizministerium No. 10/03, cited supra.Google Scholar

162 Mit Vorsatz, Frankfurter Allgemeine Zeitung, 9 Apr 2003, Nr. 84, at p. 13. (The short opinion piece takes a pessimistic view. “The attempts of the [Schroder] government to protect small investors with the passing of the 4th [FMFG] is a failure. Legislators have through their reforms done a disservice to investors.”)Google Scholar

163 Peterson, The Cartoon King, cited supra.Google Scholar

164 See Interview with Rotter, Kein faireres Modell, Wirtschaftswoche, 25 Jan 2001 at p. 150. (Rotter represents many shareholders against EM.TV).Google Scholar

165 Recall the Infomatec decision, while based on different claims, was overturned because the relevant laws for investor protection “had not yet been passed” (See commentary from one of the judges at the Infomatec court of appeal, cited above).Google Scholar

166 Cases 3-07 O 26/01 und 3-07 O 48/01, See Pressestelle für Zivilprozess 17 Jan 2003 (Nr. Z04/03) Available: http://www.landgericht.frankfurt-main.de/Presseerklaerung_ZS(Prospekthaftung_EM_TV).htm (Accessed 5 Apr 2003).Google Scholar

167 See Landgerichts Frankfurt am Main vom 17.01.2003 (Aktenzeichen 3-07 O 48/01), cited supra.Google Scholar

168 Landgericht weist 38 Klagen gegen EM.TV ab, Süddeutsche Zeitung, 18 Jan 2003 at p. 29.Google Scholar

169 See generally, Carriere, Giovanni, et. al., European Corporate Governance: A Changing Landscape? MIT Sloan School of Management 50th Anniversary Research Project (Oct 2002), at pp. 40–45. Available: http://mitsloan.mit.edu/50th/corpgoveuropepaper.pdf (Accessed 8 Apr 2003).Google Scholar

170 Manager-Magazin wrote an excellent accounting of the Metabox history in a nine-part series which it published in May, 2001. The magazine has made several follow up reports on the status. See Clemens von Frentz, Metabox: Chronik eines angekündigten Todes, manager-magazin.de, 24 May 2001, Available: http://www.manager-magazin.de/geld/artikel/0,2828,135843,00.html (Accessed 13 Mar 2003).Google Scholar

171 Frentz, Clemens von, Metabox: Letztlich gescheitert, manager-magazin.de 1 Sep 2002, Available: http://www.manager-magazin.de/geld/artikel/0,2828,211938,00.html (Accessed 13 Mar 2003).Google Scholar

172 Settop-Streit: Metabox erwirkt einstweilige Verfügung gegen Infomatec, iBUISINESS, 11 Oct. 1999, Available: http://www.ibusiness.de/members/aktuell/db/939417587.html (Accessed 13 Mar 2003).Google Scholar

173 The case also went at one point to the Bundesverfassungsgericht (German constitutional court) on a procedural matter. See BVerfG, 2 BvR 742/02 vom 27.5.2002, Paragraphs 1 - 25, (25 May 2002) http://www.bverfg.de/ Google Scholar

174 Id.Google Scholar

175 Frankfurter Allgemeine Zeitung, 28 Jul 2001, Nr. 173, at 23.Google Scholar

176 Id.Google Scholar

177 See Ad-Hoc Meldung vom 10. April 2000, Available: www.manager-magazin.de/geld/artikel/0,2828,230499,00.html (Accessed 14 Mar 2003).Google Scholar

178 See Ad-Hoc Meldung vom 28 Juni 2000, Available: http://www.manager-magazin.de/geld/artikel/0,2828,230480,00.html (Accessed 14 Mar 2003).Google Scholar

179 Frentz, Clemens von, Metabox: Ein Fall für den Kadi, manager-magazine.de, 20 Jan 2003, Available: http://www.manager-magazin.de/geld/artikel/0,2828,230484,00.html (Accessed 14 Mar 2003).Google Scholar

180 Virtel, Marten and Biskamp, Stefan, Metabox: Gewinn-Warnung offenbart Schwachstellen, Financial Times Deutschland, 29 Sep 2000, Available: www.ftd.de/metabox (Accessed 14 Mar 2003)Google Scholar

181 Frentz, von, 14 Mar 2003, cited supra. Also see Bundesverfassungsgericht case, cited supra.Google Scholar

182 Id.Google Scholar

183 Id.Google Scholar

184 See generally, Jahncke, Elizabeth S., United States v. Halper, Punitive Civil Fines, and the Double Jeopardy and Excessive Fines Clauses, 66 NYU L.R., 112 (1991).Google Scholar

185 Boudette, Neal E., Neuer Markt Suffers a Setback With Comroad Invoice Scandal, Wall Street Journal, 11 Apr 2002, at p. C8.Google Scholar

186 Id.Google Scholar

187 Auditor Says Comroad's Sales Mostly Came From Fake Firm, Wall Street Journal Europe, 24 Apr 2002 at M4.Google Scholar

188 Carney, Brian M., Teutonic Tailspin: A German Market's Rise and Fall, Wall Street Journal, 1 Oct. 2002, at A20.Google Scholar

189 Badly in need of repair, The Economist, 2 May 2002. (The article questions also how it is possible for accountants to audit statements for over three years and have – by far – a majority of income come from one company which did not exist.)Google Scholar

190 Daum, Renate, AUßER Kontrolle. Wie ComRoad & Co. Deutschlands Finanzsystem austricksen, FinanzBuch Verlag, (München 2003).Google Scholar

191 Comroad-Gründer erhält Haftstrafe, Frankfurter Allgemeine Zeitung, 22 Nov 2002, Nr. 272, at 16.Google Scholar

192 Comroad-Gründer soll Schaden ersetzen, Frankfurter Allgemeine Zeitung, 23 Nov 2002, Nr. 273, at 16.Google Scholar

193 Kein Ersatz trotz Haftstrafe, Frankfurter Allgemeine Zeitung, 14 Feb 2003, Nr. 38, at 19.Google Scholar

194 Id.Google Scholar

195 Gordon, Jeffrey N., Deutsche Telekom, German Corporate Governance, and the Transition Costs of Capitalism, 1998 Columbia Bus. L. R. 187 (1998).Google Scholar

196 See Andrews, Edmund, Making Stock Buyers of Wary Germans, New York Times, 17 Oct 1996 at D1.Google Scholar

197 See US-Aktionäre verklagen die Telekom, Berliner Zeitung, 15 Dec 2000, available: http://www.berlinonline.de/berliner-zeitung/archiv/.bin/dump.fcgi/2000/1215/wirtschaft/0077/ (Accessed 17 Mar 2003). Also see infra.Google Scholar

198 See Re, Cologne, The New Spotlight …, cited supra at pp 40 – 41; Also see In re Deutsche Telekom AG Sec. Litig., 00 Civ. 9475, 2002 WL 244597 (S.D.N.Y. Feb 20, 2002).Google Scholar

199 In re Sprint Corp. Securities Litigation, 232 F.Supp.2d 1193 (D.Kan., Sep 30, 2002) Also see http://www.sprint.com/sprint/annual/99/financial/financial_general_02.html (Sprint site, noting Sommer as a member of the board at least through 1999. He is not noted as a director in the 2000 report. Accessed 17 March 2003);Google Scholar

200 See Re, Cologne, The New Spotlight …, cited supra at pp 40 – 41.Google Scholar

201 Prospekthaftungsklagen bringen am meisten, Frankfurter Allgemeine Zeitung, 26 Feb 2003, Nr. 48 at 19.Google Scholar

202 Auf wiedersehen, Ron, The Economist, 18 Jul 2002.Google Scholar

203 Karnitschnig, Matthew and Rhoads, Christopher, Disconnected: CEO Ron Sommer Is Forced to Leave Deutsche Telekom: German Politicians Wanted Him Out Before Elections, As the Company Struggles, Wall Street Journal, 17 Jul 2002, at A1.; Also see Gerhard Hennemann, Schröder droht Debakel im Telekom-Streit, Süddeutsche Zeitung, 15 Jul 2002, at 1.Google Scholar

204 Klage gegen Kanzler Schröder, Süddeutsche Zeitung, 16 Sep 2002 at 21.Google Scholar

205 Nitschmann, Johannes, Vernichtung von Volksvermögen, Süddeutsche Zeitung, 17 Sep 2002, at (NRW) 37.Google Scholar

206 Ludsteck, Walter, Das Misstrauen sitzt tief, Süddeutsche Zeitung, 27 Feb 2003 at 21.Google Scholar

207 Geld zurück für Telekom-Aktien, Frankfurter Allgemeine Zeitung, 11 Mar 2003, Nr. 59, at 49.Google Scholar

208 Eichel bestreitet Täuschung bei Telekom-Börsengang, Frankfurter Allgemeine Zeitung, 26 Feb 2003, Nr. 48 at 9.Google Scholar

209 Ascarelli, Silvia and Latour, Almar, Europe's Reckoning May Not Be Over Just Yet, Wall Street Journal, 11 Mar 2003 at C1.Google Scholar

210 FAZ, 11 Mar. 2003, cited supra.Google Scholar

211 See SdK website, available: http://sdk.softbox.de/aktuell.php?id=223, (Accessed 18 Mar 2003. Readers should note that the content of the website changes often).Google Scholar

212 FAZ 11 Mar. 2003, cited supra.Google Scholar

213 Angeblicher Emissionsbetrug, Handelsblatt online, 26 Feb. 2003, available: www.handelsblatt.de (Accessed 17 Mar 2003).Google Scholar

214 Boston, William and Manzaroli, Taska, Deutsche Telekom Plans Final Charge On Its Real Estate, Wall Street Journal Europe, 20 Dec 2001 at 1.Google Scholar

215 Id.Google Scholar

216 Handelsblatt, 26 Feb 2003, cited supra.Google Scholar