Liability of the wealth management adviser

Conviction for failing to provide information on the risk of capital loss

On 3 June 2026, the Paris Commercial Court handed down an important ruling concerning the liability of wealth management advisers who had marketed investment products linked to the Maranatha hotel group. Without calling into question the legality of the financial arrangement proposed to investors, the court ruled against the failure to provide clear information on the main risk of the transaction: the Maranatha Group’s insolvency and the impossibility of honouring the promises to repurchase the securities.

The disputed investments in the Maranatha Group

Between 2014 and 2016, Mr and Mrs G. invested a total of 300,000 euros in several so-called ‘VIP Club Deal’ transactions offered in connection with the Maranatha Group. These investments were based on a structure combining subscription to the share capital of limited partnerships with share capital and advances to the partners’ current accounts.

The main appeal of the product lay in a promise to repurchase the securities made by Maranatha, allowing investors to hope to recover their capital whilst benefiting from an attractive return. The schemes had been marketed by Elite Investment Return and Elite Asset Management, acting respectively as wealth management advisers and financial investment advisers.

The situation took a sudden turn for the worse when the Maranatha group was placed in administration in September 2017 and subsequently went into liquidation in 2019. Investors recovered only a small fraction of the sums invested and sought to hold the financial intermediaries liable.

A reminder of the financial adviser’s obligations

The court strongly emphasises that both financial investment advisers and wealth management advisers are bound by a duty to provide information and advice.

This obligation is not limited to presenting the advantages of the product. It also requires them to disclose the unfavourable characteristics of the investment as well as the risks associated with it. The adviser must enable their client to make a fully informed decision.

The court emphasises that this obligation is assessed as at the date the product was marketed. Professionals are not required to predict the future or guarantee the profitability of an investment, but they must faithfully inform their clients of the risks known or identifiable at that date.

No fault regarding Maranatha’s financial situation

The investors argued that the Elite companies should have detected the Maranatha group’s financial difficulties as early as 2015 or 2016.

The court rejected this argument. It noted that, at the time of the subscriptions, the available activity reports indicated a favourable situation. The valuations carried out by KPMG did not reveal any cause for alarm, and the statutory auditors had not yet refused to certify the accounts. This refusal did not occur until December 2016, i.e. after the disputed investments had been made.

The judges therefore considered that the Elite companies could not reasonably have anticipated the group’s future collapse.

The fault found: the lack of information regarding the risk of capital loss

The advisers were nevertheless held liable on another ground.

The court noted that the subscription documents highlighted exclusively the benefits of the investment: the advertised return, repayment of the current account and the promise to repurchase the securities. By contrast, no document explicitly mentioned the risk of capital loss.

Investors were not informed of the consequences that Maranatha’s potential insolvency would have on the fulfilment of the repurchase promise, even though this solvency was the essential condition for the investment’s success.

In the court’s view, the Elite companies were necessarily aware that the group’s insolvency represented the principal risk borne by investors. By failing to set this out clearly, they breached their duty to provide information and advice.

Compensation limited to loss of opportunity

The court, however, refused to award full compensation for the losses incurred.

In accordance with established case law on failure to provide advice, the loss consists solely of a loss of opportunity to refrain from investing or to invest differently. It therefore does not correspond to the total sums lost.

The judges noted that the investors were specifically seeking high-yield, tax-efficient investments. Even if they had been properly informed of the risk of capital loss, they would not necessarily have abandoned the transaction.

The loss of opportunity is therefore assessed at 70 per cent of the financial losses incurred. On this basis, the court orders:

• Elite Investment Return to pay €21,799.91 to Mr G. for the Hôtel Alpenrose investment;
• Elite Asset Management to pay €42,301.01 to Mr G. in respect of the VIP Hôtel Royal Saint-Honoré investment;
• Elite Asset Management to pay €43,318.13 to Mrs G. in respect of her VIP Hôtel Royal Saint-Honoré investment.

Scope of the decision

This decision illustrates a key distinction regarding the liability of financial advisers: they are not liable for the unforeseeable insolvency of a business operator, but they may be held liable where they fail to clearly inform their clients of the fundamental risk associated with the product offered.

The judgement thus reiterates that an investment presented as secure must, as a matter of necessity, include explicit information on the risk of capital loss where its profitability depends on the solvency of a third party. Failing this, a breach of the duty to inform gives rise to a claim for compensation on the grounds of loss of opportunity.