Ruling On Issuer Liability In Secondary Market

Taberna Europe CDO II Plc v Selskabet (formerly Roskilde Bank A/S) (In Bankruptcy) [2016] EWCA Civ 1262

In December 2016, the Court of Appeal handed down its first ruling on the question of whether a claim under the Misrepresentation Act 1967 against an issuer is available to secondary market purchasers. The judgment offers helpful guidance on the circumstances in which a bank may be liable to those other than its original audience for a misrepresentation contained in an investor presentation. It also considers the effect of the bank's disclaimer on the final page of the presentation, how to construe exclusion clauses and the applicability of the Misrepresentation Act 1967 to secondary market purchases.

The Court of Appeal overturned the first instance decision in which damages of over €26 million had been awarded to the claimant investment company (Taberna) for misrepresentation by the defendant, a now bankrupt Danish bank (Roskilde). At the time, this ruling was generally considered to be the first occasion on which an English court had given judgment for misrepresentation against a note issuer in respect of a purchase of notes in the secondary market.


The claim arose from Taberna's purchase in February 2008 of subordinated notes originally issued by Roskilde; the notes were purchased by Taberna on the secondary market from Deutsche Bank AG. During the second half of 2008, Roskilde experienced severe financial difficulties and entered into bankruptcy in early 2009. As a result, it was unable to make any principal or interest payments to Taberna on the subordinated notes.

Taberna sought damages for misrepresentation from Roskilde, claiming that it had been induced to buy the notes by misrepresentations made by Roskilde about its non-performing loans. Roskilde had produced an "Investor Presentation" for use in conjunction with a "road show" aimed at potential investors in the new issue of securities. The document was a slide show to accompany an oral presentation and contained a lengthy disclaimer on the final page purporting to restrict the scope of any representations, and exclude liability for any statements. The presentation included a graph and figures for the coverage ratio of the loans. Taberna obtained a copy of the document after Roskilde had published it on its website. In addition, another bank had, with Roskilde's encouragement, directed Taberna to the Investor Presentation on the website in connection with a further planned issue of debt.

Taberna argued that it had relied on the Investor Presentation and claimed damages from Roskilde in the sum of the purchase price paid to Deutsche Bank, under section 2(1) of the Misrepresentation Act 1967.


The issues considered on appeal were:

whether Roskilde misrepresented the amount of its non-performing loans to Taberna in the Investor Presentation...

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