German ministries introduce plans to protect small investors
BERLIN May 22 (Reuters) - Two German ministries announced plans on Thursday for a series of measures that would protect small investors by imposing tighter rules on firms selling financial products to the general public.
Finance Minister Wolfgang Schaeuble and Justice Minister Heiko Maas said their joint four-point "action plan" programme would give small investors more protection from complex financial investments.
The move follows the insolvency in January of German windpark operator Prokon, which had raised 1.4 billion euros mainly from retail investors by offering so-called profit-participation certificates through advertising campaigns on German prime-time television.
Among other steps, the plan will give financial watchdog BaFin far greater powers. Inexperienced investors should get more protection from advertising and marketing campaigns for such products.
The products should also include warnings of the risks involved. Securities prospectuses should only be updated annually and include more information.
Consumer groups accused Prokon of attracting investors with promises of potential returns of at least 6 percent a year without giving sufficient warning of the risks. Its insolvency dealt a blow to thousands of retail investors who had hoped to profit from Germany's shift from nuclear to renewable energy sources such as wind and solar. (Reporting by Matthias Sobolewski; writing by Erik Kirschbaum; Editing by Larry King)
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