Lenore Chen
The Taiwan High Court rendered the 103-Jin-Shang-15 Civil Decision of March 29, 2016 (hereinafter, the “Decision”), holding that although a loss is incurred after an investor places an order for futures investment, this still has no specific causal relationship with the passive qualifications of the sales representative.
According to the facts underlying this Decision, the Appellant asserted as follows. His son attended a roadshow on futures products organized by the Appellee. After one of the Appellee’s sales representatives provided materials such as investment recommendation planning reports to him, he set up a special account and asked the sales representative to operate futures products. However, he subsequently sustained over 96% loss and subsequently learned that such sales representative had been subject to a final judgment imposing a criminal penalty for violation of the Futures Trading Law and thus had not had any passive qualification for being a sales representative and should not have acted as a sales representative. The Appellee was also liable for its obvious negligence due to the failure of its internal control system to detect the criminal history of the sales representative.
According to the Decision, the futures transactions engaged by the Appellant took into account multiple factors such as the judgment and recommendations of such sales representative, the domestic and overseas political and economic environment and market demands. Therefore, the Appellant should assume the trading risks on his own.
It was also pointed out in the Decision that the Appellant’s investment in futures products involves high risks and high profitability and is affected by multiple factors during the investment period such as economic cycles and domestic and overseas political and economic environment with rapid price fluctuations of products. If the Appellant incurred losses after placing orders, such losses were caused by his decision on the purchase or sale of futures products and had no sufficient causal relationship with the fact that Chao-wei Hsu had not had the passive qualifications for being a sales representative and should not have acted as a sales representative pursuant to law.
Since it was further held in the Decision that the Appellant’s assertion that the sales representative and the Appellee should assume joint and several liabilities was not acceptable for reasons mentioned above, the appeal was rejected.