Publication Type

Journal Article

Publication Date

3-2012

Abstract

The purpose of this article is to analyse relevant judicial decisions in Taiwan regarding structured notes sold to retail investors. Regarding pre-sale disputes, one issue was that investors failed to read contractual documents properly before signing contracts, so there was a question whether they could later claim a bank’s violation of its duty to explain. This article favours the view that an investor’s signature may exempt a bank’s duty, provided that investors are made aware of relevant warnings. In addition, for suitability assessment, relevant judgments show that customers were too easily classified as active investors based on a simple questionnaire. This may violate the spirit of the suitability rule. Moreover, courts or regulators must clarify the nature of post-sale duty to report and whether a bank has a duty to advise a client under a trust relationship. Furthermore, to look at the big picture, regulators should review the nature of investment in overseas structured notes via non-discretionary trust with a domestic bank in order to construct an efficient way to regulate such forms of investment and to justify the effectiveness of alternative dispute resolution mechanisms so as to offer complete protection to retail investors.

Keywords

Structured notes, structured financial products, derivatives, duty to explain, suitability, duty to report, sale restriction, dispute resolution, investor protection, trust, Taiwan

Discipline

Asian Studies | Banking and Finance Law | Commercial Law | Courts

Research Areas

Commercial Law

Publication

Academia Sinica Law Journal [中研院法學期刊]

Issue

10

First Page

161

Last Page

224

ISSN

1995-753X

Publisher

中央研究院法律學研究所籌備處

City or Country

Taipei

Additional URL

http://hslib.sinica.edu.tw/?q=en/tocs/3528

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