Liability of Consob: Judgment No. 9067 of 2018 and the Duty of Supervision
Judgment No. 9067 of the Court of Cassation, issued on April 12, 2018, represents an important turning point in the case law regarding the liability of Consob, the National Commission for Companies and the Stock Exchange, for failure to supervise. This case, which involves numerous investors harmed by a brokerage agent, highlights the need for proactive intervention by the regulatory body to ensure investor protection.
The Context of the Judgment
In the case at hand, 113 investors had sued Consob and the Italian Republic, claiming damages resulting from unlawful behavior of a brokerage agent. The first-instance judges had recognized a partial liability of Consob, attributing to it a delay in the inspection activities. However, the Court of Appeal of Rome had modified the decision, denying Consob's liability for most of the violations.
The Court of Appeal found that Consob's inspection activities were delayed, despite reports of irregularities.
The Principles Established by the Court of Cassation
With judgment No. 9067, the Court of Cassation stated that Consob has a duty of supervision over financial intermediaries, a duty that arises from the principles of legality and impartiality. The Court emphasized that the discretion of the agency cannot justify the failure to implement control measures when clear warning signs emerge.
- Consob has inspection and control powers that must be exercised promptly.
- Consob's liability cannot be excluded simply because the harmful conduct was perpetrated by third parties.
- It is necessary to demonstrate the causal link between Consob's omission and the damages suffered by the investors.
Conclusions
Judgment No. 9067 of 2018 marks a significant step in strengthening investor protection and holding Consob accountable. Future decisions will need to follow this direction, ensuring that supervision is not only a power but an unavoidable duty for the regulatory body. The need for timely intervention in the presence of signs of irregularity is now clearly established by case law, to the benefit of all investors.
