SMALL SHAREHOLDERS AS CONSUMERS

The new concept of shareholder, investor and consumer. Defense of the small shareholders and needs for the future.

INTRODUCTION

The analysis of the small shareholders in their consideration as consumers results of a perception of the situations and daily problems of the small shareholders who are defenseless within the European and national legal framework due to the consideration and legal treatment of them as owners of a proportional part of the companies of which they are shareholders and not like consumer-economizers who use investment products whose rentability is a "service" that they obtain from third.

Reality always goes in front of Right, and perhaps in this case, reality has been distanced so much of right, that the modifications of this last one are not able to approach the objective of defending and informing the small shareholders, simply by the fact of not reforming from beginning, if the small shareholder is really owner in a certain percentage of one enterprise/inheritance or simply one saver who has chosen a product of investment with variable rent absolutely outside his will.

Sadly, Spain has become an excellent example of the different situations and problems in which are the small shareholders and investors involved. Throughout this opinion the analysis will take advantage of the problems lived in the cases: Values Agency AVA, Values Agency Gescartera, Credits in shares of Banesto, Shares and insurances "Unit Linked" of Eurobank, "Directive Dinámiva", investment in the Argentinian National debt through Fibanc and other organizations, OPA of Terra from Telefónica, closing of "Recol Network", commercialization of atypical deposits in the majority of the banking organizations especially the cases of Caja Rural de Valencia, Caja de Ahorros de Navarra, and BBVA, the investments of BBVA in hidden paradises, and the negotiations behind closed doors of the shares of Dragados and Vallehermoso of the BSCH and Metrovacesa of the BBVA. All these cases have produced great losses to the Spanish economizer-investors and they have put them in situations of serious difficulty to defend its interests, and in addition they have shown the problems of the different legal instruments to defend the inversors.

Next, we will make an analysis of the concept shareholder as consumer in the legislations from which a legal position at the present time is clearly obtained, simply a small shareholder is nowadays not considered a consumer, and in some cases consumer to the small-investor does not consider itself either, and for this reason it is regulated in continuous form the protection and provided information to shareholders and investors to protect them, but without considering them, consuming and applying the predicted legislative norms for the defense of such.

In this way they are not able to head off the problems of the small shareholders and investors, since the contracts and the decisions of "Financial Engineering" adapt to the continuous normative changes of market regulation, fiscality and information to the investor generating new financial products and "upsets" in the value markets that respond to the objectives of generating benefits for the financial organizations and some quoted companies but in many cases do not protect or load the losses of the small investors.

1. - LEGAL CONCEPT OF SHAREHOLDER, INVESTOR AND CONSUMER

Legally, the first difficulty that arises when raising the necessary protection of the small shareholders is its own delimitation as category. It does not turn out simple to limit what is a small shareholder. A small shareholder is an investor? Is a minority stockholder? Is a user of financial services? Is a consumer?
In the small shareholder a triple characterization comes together:

1. -The small shareholder is a shareholder or partner of a stock company and as such owner of rights of political nature (vote, information, attendance, etc.) and economic nature (participation in the benefits, right of preferred subscription, etc). Habitually the position of the small shareholder in the quoted society reaches not even the qualification of minority since the small shareholder by itself does not reach the percentage that the Spanish Law of Stock companies demands for the exercise of the minority rights (generally 5%).

2. -The small shareholder of a quoted society is an investor in negotiable values, since he should acquired his actions in the stock market, either though a stock-exchange transaction, or going to one Public Sale Supply. Especially the small shareholder is a small investor or a non-professional investor, whom requires elevated levels of protection than the professional investor.

3. -The small shareholder will be necessarily a client of a credit organization. In order to acquire the condition of small shareholder the intermediation of an Investment Services Company or an authorized credit organization is essential to give investment services. Laterly, the small shareholder also will need, compulsory, the aid of the mentioned organizations for the exercise of his rights as shareholder and to undo of his position. To this other services can be added that voluntarily the small shareholder in relation to his position requires, as can be the advising in relation to his investment.

The question that remains without solving is if the small shareholder is a consumer and can benefit from the protection that grants the consumer regulations. In order to answer this question we must analyze in detail each one of the three facets that concur in the small shareholder:

1.The small shareholder like shareholder or partner of a Stock company, legally is not consumer. Legally the small shareholder is partner of a Stock company, and therefore he would not only be consumer but he could consider professional. Although it is sure that the small shareholder is the weakest part of the relations that settle in the Values Markets, and consequently its position deserves protection. With this argument, some authors tried in the past, applying to the small shareholder, by analogy, the constitutional principle of consumer protection (art. 51 EC), alleging that it is a generic system of protection of the weakest part. But in the same way in the Right of Work the worker is protected, because it is the weakest part of the relations that are settle in the labour scope, and for that reason is considered consumer. The protection of the small shareholder is articulated in Spain through the Law 24/1988, of 28 of July, of the Values Market and its regulation of development.
Although it is sure that in the exercise of its political rights as shareholder (information, vote, attendance, etc.) it is logical to think that the shareholder does not act as consumer, also could think that in the exercise of its economic rights (dividends, capital benefits, rights of preferred subscription, etc.) we could imagine that the shareholder acts as investor and consumer, but in this case we are in front the absence of a contract between a company and a consumer that fixes those economic rights, and instead of the contract we have a title of property in a certain percentage of the company, therefore legally he is not a consumer.
2.The small investor he can be a consumer, but the small shareholder although he is an inversor, legally is not a consumer. Legally, according to some authors the investor is not consumer on the basis of three principles: 1º saving is by definition in opposition to the act to consume, 2º the consumer must be the final addressee of the good, and since it considers itself as consumer good the title in which it is invested, this is not dedicated to the consumer but to a future sale of the same one. 3º The sale of the good that is consumed must come from a company, and in the case of the purchase of titles or shares in the negotiable markets the origin of such is not known, could be companies or other individuals those sell the titles.
In relation to the first principle, we have to differentiate the concept of saver as the person that reserves its resources without consuming to do it in the future, of the investor who contracts services to obtain rents or capital benefits from his saving, by this way are the rents obtained, those that really constitute the good or service consumed, and therefore the investment can be a consumer act.
Maybe the definition that gives the Italian law (30 of July 1998, on the rights of the consumers and users) of the consumer approaches us more the natural concept of investor as consumer like "people that buy or uses goods or services for the intentions non related with their job or enterprising activity "or other habitually used in the Italian legislation which understands by consumer "who acts for his interests or his family".
In the case of the investment in a deposit on credit, nobody would doubt that the investor is a consumer, in fact we would find references and applications of the legislation on abusive conditions that directly regulate the proportionality between the penalties in a deposit on credit and its remuneration, as consumer protection.
In relation to the second principle that it would prevent that an investor was a consumer, - the final destiny of the good must be the consumer, is necessary to consider that the good that acquires the investor are rents and capital benefits of their investment and these of course are dedicated to the particular use and consumer of the investor, in the same way with respect to the third principle, since consumer good they would be the rents and capital benefits, the investor would not obtain these from the individual or company that sells the titles in the negotiable markets but of the organization that emits these titles and is responsible of the evolution of such.

But although indirectly always they are the rents and the capital benefits the goods or services consumed by the investor, legally can not be considered in this way. In this sense in a deposit on credit it would be clear that the object of the contract is the obtaining of interests, and therefore the investment would be a consumer act.

The acquisition of shares in an investment fund would suppose the purchase of a percentage in a heritage dedicated to invest. But the inversors they could be considered consumers, at least collectively, of the agency contracted to obtain to the rents and capital benefits of that heritage.

The acquisition of obligations or private fix rent bonds, or even public, it supposes the purchase of a title as creditor of the private company or the State, and this title has the own condition the of the emission of that Private or Public Debt. Therefore in last instance it could be considered that a general contract for all the investors exists whose object is the obtaining of rents.

But in the shares acquisition a percentage of a company is being acquired, it does not exist a contract that determines the objective of that purchase of shares is to look for their rentability, although this objective is implicit it can only be obtained based on the performance of the Administration Council of the quoted company, and this is not only a company that contracts with the shareholder, but all the opposite, it is assumed that it is named by the shareholders to acts in their name. For this reason, legally, the shareholder although is inversor, is not consumer.

2.The small shareholder is evidently consumer of services of the financial organization of intermediation, but not of the company of which he is shareholder.

Of course, in the legislation the shareholder is protected as consumer of services of intermediation by the Agencies, Values Societies, and banking or credit organizations, because he receives services of these associations as executing the purchase and sale orders of actions, receiving the payment of dividends, changing the deposit organization, etc. Although the legislation puts him under procedures and institutions of claim different from the rest from the existing ones for the other goods and services of consumer. (Note - 1).

(Note - 1) Sometimes, when the meetings of shareholders are summoned, also the services of the intermediaries take part - agencies, values societies and banking or credit organizations normally communicating the call of shareholder meeting and admitting the vote in the delegation of the organization, in these services since they affect the political rights of the shareholder is difficult to consider him consumer, but which protection have in this case shareholders in a call of meeting badly done. For example the recently summoned by TERRA, in which the Popular Bank late emitted the calls of meeting of shareholders announcing the celebration of the Meeting one week later of the real date.

2. - EXPANSION OF THE SHARE MARKET AND ITS DERIVATES BETWEEN CONSUMERS.

The Financial Market, in his function of obtaining the saving of the domestic economies and the companies and to take it to the companies that need financiation for their activities, offers them different ways:
1. - The first and most accessible one is asking for credit to the financial organizations, which provide it to a certain interest thanks to the saving deposits that they obtain from the domestic economies and other companies to which they remunerate as well with a certain interest. But this formula offers two disadvantages for the members of the financial market, first it is that this financiation has a fixed cost for the companies that do not depend absolutely on the success or failure of those activities we want to finance and therefore it supposes a risk for the company, the second disadvantage is for the financial organizations, that before the narrowing of the margins in the interest rates finds little attractive the old formula of "a bank lent money and pays an interest, and gives money receiving an interest, the difference between these interests is its benefit", however it turns out more attractive to them to act as intermediaries receiving commissions for this work.

2 The second way is to emit debt from the company that needs financiation, this debt that is contracted in form of titles of fixed rent "obligations, promissory notes and bonds" by the investors are interesting for the financial organizations that obtain benefit through the sales commissions of these titles, but continue having inconvenient for the companies since again they will have to pay a fixed cost for this financiation, and in addition this cost is high because the interest that offer in their Debt must be higher than the one of the National debt (since the State offers more guarantees than a private company) and in many occasions must offer interests next to those of the National debt of emergent countries (since only companies with an enormous prestige and solvency can offer to the investor greater security than the one of a State). By these reasons only some companies with benefits guaranteed and uniform in the time (Railways and the own financial organizations, BBVA, Caja Madrid, etc.) they are bold to use this means of financing, that on the other hand is offered to the small investor in counted occasions and like a product reserved for "good" the clients of the banking organizations. The secondary market of Prived Debt in Spain as soon as it is spread, and usually is a market more reserved to the Investment funds.

3. The third way is to launch shares turning partners of the company the investors, this formula is attractive for all the members of the financial market, for the financial organizations because they obtain benefit with the sale and with the operative of these actions, and for the companies because they obtain financing that they will have to remunerate in case of obtaining benefits and only distributing dividends, and in most of the cases this remuneration with dividends is symbolic since the investor has another form to be remunerated that is through the capital gains of the actions sale. This remuneration does not suppose any cost to the company, since it is paid by the new shareholders who "consider" that the company is more worth, and in case that the new shareholders "consider" that the company is less worth except the old shareholder will obtain a loss in the sale of his actions. This formula is ideal for the companies since it supposes few costs, but logically also it has had inconvenient that throughout the time they have been saved:

1º. - The first disadvantage, is the risk when emitting the actions of the company, these are acquired by a majority investor who assumes the direction of the company. But this disadvantage has been saved through a controlled emission of shares into the hands of the small shareholders, reserving a sufficient number of shares for the property or direction of the company, or for allies of this (normally financial organizations). (Note 2) This disadvantage every time smaller, since the financial organizations do not have either to invest too much to support the property of the companies since through the investment funds that they commercialize and giving instructions to the managers of these funds, they can acquire high percentages of property in the companies being the small investors or "participators" in the investment funds those that contribute the financing. (Note 3)

(Note 2). - The risk of acquisitions of shares by a majority investor, far from supposing a risk for the company, nowadays supposes a serious risk for the small shareholder, in 2002, in Spain, we have the cases of share sales "behind closed doors", made by Bank Santander Central Hispano of its shares in the companies Dragados and Vallehermoso, and by the Bank Bilbao Vizcaya Argentaria of its actions in Metrovacesa. These sales of shares were not made at the price of stock-exchange quotation but to a superior price based on the real knowledge of the companies, from their own Board of Directors and with the added value that a percentage of the company sufficient to accede to their Board of Directors and the direction of the same one. In both operations a serious damage to the small shareholders of both companies took place who saw how similar shares to their own were sold paying higher prices to those of quotation and without having the opportunity to sell their actions at that price. Only majority shareholders, BSCH and BBVA benefited from these operations, fulfilling scrupulously the effective legislation at that moment that only forced to make the public offer of acquisition of shares for percentage superior to 25% of the total of the shares.

This type of operations cannot be controlled through the legislation, since there are always ways - buying shares through different societies or in several operations of transaction of shares to obtain the same result being sold the actions at different prices from the quotation one, without any care to the percentage legally established to avoid these operations. In both cases was demonstrated who was the authentic proprietors of these companies - the banking organizations although owned less than 25% of the companies -, able to manage and sell them, whereas the small shareholder is a mere spectator who waits for the consequences of these operations on the quotation of his actions.

(Nota. -3) The support of the financial organizations and the investment funds controlled by these was clear in the OPA of Telefónica on its branch TERRA, in 2003 in Spain, in which through private negotiations between Telefónica, the financial organizations and their investment funds, these acceded to sell their shares to Telefónica at the OPA price, a too low price that supposed serious losses for practically all the shareholders, being only the small shareholders and the American investment funds the only ones who did not go to the OPA and went to the courts to defend themselves of the undergone manipulation.

In this case, although the small investors of the investment funds were not in agreement with the sale of shares of TERRA to Telefónica, nothing could do in front of the performance of the Managers of the Investment funds that in theory must have defended the interests of their contributor ones, showing once again the small economizer is only a mere spectator in front of the operations conducted by the great investors, and in the case of the investment funds even with the money of the contributor or small investors.

2º. - The second disadvantage, is the necessity to influence the opinion of the small investors, so that these "consider" that it is going to be profitable to become shareholder of the company and to assume that risk. This disadvantage has been saved through the influence and manipulation of the public opinion and mass media, through strong expenses in publicity in these means, or simply acquiring the property of such. In addition has been saved with the collaboration of the financial organizations, which not only obtain the benefit/commissions of the operative in shares with the small investors, but in addition they are placed in a power position within the other productive sectors of the country, since they control not only the financial system, in this way they also participate in the control and management of the big companies of the other productive areas not only with their shares, but also with the investment funds, and finally influencing the small investors or small savers who are their clients so that they stay or not as shareholders of these companies. (Note 4)

(Note - 4) The ways of influencing the shareholders are simply the payment of commissions to the bank directors so that they provide "interested advices" to the small investors, and grotesque situations to force a banking client to become shareholder of the own bank in exchange for granting him a loan or a deposit with high rentability, as it happened at the previous moments to the scandals of insolvency of the Spanish banks Banesto in 1994, and Eurobank in 2003.

At the moment the used method, to push the small saver towards the purchase of certain shares, is the denominated atypical Deposit or structured deposit, consisting in an attractive deposit on credit with high rentability, which attracts the small saver towards a high and safe rentability, and to which the commitment of purchase of certain shares in case of going down is added for a certain period of time. In this way, the banking organization undoes of those actions that do not interest him due to their bad results, and "place" them to small investors who have been attracted by deposits on credit with safe rentability.

Finally one has been saved with the help of the European National Governments who have come to the privatization of the big companies or public monopolies, and in interest of the market liberalization and the breaking of these monopolies has looked for the domestic economies as shareholders of these big companies, have turned them in something that they did not wish to be. Individual and small economizers, in their general interest to obtain interests with small risk, had preferred to deposit their savings in obligations or promissory notes of these big and reliable monopolies, obtaining fixed rents, but they not offered them this alternative since it was not financing which what was looked for with the sale of shares of these big national companies, but retiring of the same ones the property of the State and avoiding that the property of the same ones fell in few hands. (Objective which given the participation that at the moment does not exist in the financial organizations in the property and control of the old monopolies of the State either it obtained.)

In many European countries without tradition in the stock-exchange investment, it was the fact of the privatization of the public monopolies, with the deceptive "sensation" that these companies were going to generate always capital gains, the one that has pushed million economizers who only looked for a saving product with rentability, not only to the risk of these investments, but what is worse, being minority proprietors of companies in which they do not have voice nor vote. (Note 5)

(Note - 5) As shows this tendency of the national Governments we have the privatization in Germany of Deutsche Telekom A.G. (denominated Volksaktien - "the shares for the people") that initiated their walking in Stock market with great benefits (the first day of quotation they raised 16% and they duplicated their value several times in the first years), even inducing many individuals to lent money to buy these actions, and that now in 2004, are object of strong losses for the small economizers who were attracted by the phenomenon of stock-market.

In Spain, in 1995, big public companies like Telefónica, or Argentaria (the only public bank competing in the market of banking organizations) were privatized through Public Supplies of Sale of Shares, with clear initial benefits, the publicity of these show housewives recommending themselves the investment in these actions, even occurred the picaresque in Values Agencies of paying to lend the identity of people who fictitiously bought and sold immediately these actions at the moment in which appears the OPV, in return the Values Agency remained the benefit of the capital gain of the sale of shares , since these supplies limited the number of shares that an individual could buy trying to avoid the speculation and that the actions were bought by a majority investor at the moment of their exit on sale.

The publicity of these OPVs promoted by the State, was followed with interest by companies which had not been public (like Telepizza) to create the same sensation of security in the clients, who also went to these OPVs, until these began to fail overcoming the reality of the companies to the publicity of their OPVs.

The access of the economizers to the investment in shares is due to the interest of the companies to obtain cheap financing and the financial organizations for the perception of commissions in front of the narrowing of margin in the interest rates. At no moment there has been any interest to give no participation in the companies to the minority stockholders. The Meetings of Shareholders have become periodic proceedings that make the companies, without nothing of which is contributed or denounces there has no value, the Board of Directors are named by the majority shareholders, even the "independent advisors" supposedly named to defend the interests of the small shareholders, and carry out the will of the majority shareholder. And in the immense majority of the cases, the economizer has not taken any interest either to participate in the company of which he was shareholder, being his only interest the dividend to perceive and the capital gain of his actions.

In this way although legally the shareholder is a partner of a Stock company, and therefore he is not only consumer but we would have to consider him professional.

The reasons and the way of access of the economizer to the share markets give a different reality in which the small shareholder is a consumer of a saving product whose rentability entails a risk of winning or losing, and the company of which consumes is the Board of Directors of the company in which he has invested. In this way when he has a conflict with this Board of Directors, he is defenseless since he cannot go to the legal protection of the consumers, but he must defend himself with the legislation of the Stock companies, without taken into consideration this one the weakness of the small shareholder.

3 - THE SMALL INVESTOR NEEDS AN ALTERNATIVE TO THE PRESENT MARKETS OF NEGOTIABLE VALUES

In regard to the inevitable concept of shareholder as co-owner of a company, and the regulation of the same one in agreement with the Law of Stock companies, maybe it would be necessary to include in the Regulation of the values market the figure of "variable rent obligations" and even allowing its exchange by shares.

This figure does not exist in the present values markets, in fact the figure that exists is the one of "convertible obligations in shares with or without right to vote" through which it is attracted the investor towards a fixed rentability, and after an evidently successful experience (loosing is not a possibility since the obligations are titles of fixed rent) the decision to become shareholder of the company appears, although then will let receive that rent (unless there is distribution of dividends) and will be put under bumps of the quotations of the shares.

Lack of conscience and incentives to be shareholder

As Consumers Association, in ADICAE, we become aware of the interest of great number of economizers to contribute with their savings to the development of the productive areas and to obtain benefits or losses by this contribution, it is to say a variable rent. But at the same time also is evident a desmotivation to participate in the companies with their vote in the meetings of shareholders What could contribute a small shareholder with its attendance to these meetings? Which information can receive with its attendance to these meetings? And how can he influence it with his vote in the decisions of these meetings?

Also the distrust of the small shareholder is evident before the fluctuations of the shares quotation due to "news without confirmation", a small shareholder can assume a slope in the quotation of its shares due to the publication of bad results of the company or to external effects (raised of petroleum, wars, etc.) but he receives like a manipulation of the value of his shares the changes of quotation due to investment expectations in emergent markets, in new technologies, through fusions or corporate acquisitions, that later do not take place, or simply can be very different in the reality from how they have spread in mass media.

The lack of uniformity in the presentation of the annual accounts of the companies, specially the financiers, as well as the successive scandals of valuation of the companies assets (Enron, Worldcom) and the complicity of the companies auditors, create in spite of the national attempts of regulation a posteriori, one founded distrust of the small shareholders on the Board of Directors of the companies and on the reality of the same ones. (Note - 6)

(Note - 6) Sample of the generalized acceptance that exists over the lack of rigor of the annual accounts of the companies, is the case of BBVA, that in 2002, allow to know the existence of accounts in fiscal paradises of the banking organization, in the name of interposed societies to hide their existence, and destined to the financing of political campaigns in South America. These deviations of funds did not suppose fiscal penalties due to the prescription of these offenses, had the only consequence of withdrawal of one of the two main members of the Board of Directors of BBVA. Most of the BBVA shareholders took these revelations as operations of internal policy to cause a relief in the direction of the BBVA, nobody considered the impossibility of which any member of the Board of Directors was expert in the existence of these hidden accounts, able to change governments in South America. And far away of a slope in the quotation of the BBVA shares due to its concealment of patrimony and hidden in the annual accounts of the BBVA, this stayed and even it raised in the last moments the knowledge of this news due to the image of force that acquired the company as organization able to cause governmental changes.

The investment funds have not been able to be the alternative for the small investor.

The investment funds do not constitute an alternative of safer investment for the small investors all the opposite even generate greater distrust than the investments in stock-exchange values.

In first place because the contributor of an investment fund has limited its rights of information and defense as consumer when he constitutes himself as minority co-owner of a patrimony that as a whole is the unique one that can demand responsibilities to the fund manager. Again the small investor find serious difficulties due to his minority situation, since he has not enough number of participation as to request accounts in the managing organization or to even request its destitution. In fact managers of the investment funds are named and their decisions come dictated by the financial organizations that commercialize these funds.

Secondly because the investment funds are patrimonies that do not have any productive activity, only speculate with the other negotiable values, therefore the only valuation that can become of a investment fund is the analysis of its last rentabilities and hope that the organization makes in the future her work of speculation with the same success.

Thirdly, because to the margin of information if a fund invests in the short term in national debt, in fixes or variable rent, no matter how much it is desired to regulate by the Control Institutions of the Financial System the percentage that these funds invest in the different types of titles, the true is that the rentability of the funds always is due to the speculation, the constant changes of position and investment of these patrimonies, and therefore not serves to much to the small investor know which is the position of these investment funds in a certain day, the chosen one to invest in them, since the following day the investment positions can change radically.

The ideal of the investment funds facing the small investor was based on since this does not have enough formation to know the market values; he could trust his money so that the managers of the funds managed them with their experience in these markets. But the control that the financial organizations exert on these funds has taken the small investor to consider them another banking product, considering the banking organization responsible of the results of these investment funds.

And of course, from the point of view of formation of the small investor, the investment funds provide little lessons to them, except the one that says also in the secondary markets of fixed rent also is possible to be lost money. (Note - 7)

(Note - 7). - In Spain, in 1994, the investment funds on fixed rent in the long term produced losses due to the raise of the interest rates of national debt, generating this phenomenon losses in the operations of speculation with obligations and Treasury bills in the secondary market. At those moments this situation supposed one hard lesson for the small investors, who in their majority could not explain themselves how it was possible that the product that had sold to them in their banking organization as a product of "rent fixes" could have losses. Such was the information degree that provided the banking intermediaries to the small investors.

In last instance, the investment funds have contribute even more to prevail the small investors of their rights of vote in the quoted companies, since the contributor ones of a investment fund do not only know the investments in the different companies in which they invest the funds when hold their Meetings of Shareholders, but in addition they are not consulted neither to exert the vote rights which would correspond them indirectly, and nor so at least to take decisions from investment or not in these.

The legislation of the Institutions of Collective Investment would regulate in depth not only the information addressed to the contributor ones of the investment funds (who must have right to know the distribution of the property of its own fund, to know who manage the performance of its manager) but also looking for the investor participation in these funds allowing him to express his opinion on the performances and decisions of the manager.

Perhaps a new market of negotiable values, private debt with variable rent would be the solution.

By these reasons, the small investors whom do not have conscience of shareholders would positively receive the possibility of investing in the companies, obtaining benefits or losses based on the annual results of the company, through titles or obligations that located to the investor as an creditor of the company, with general conditions for all the bondholders who would turn them consumers and not proprietors of that company.

These bondholders would not be other people's to the fluctuations of quotation of these obligations, since the expectations of future benefits or losses would affect to the quotation of these obligations in their secondary market. But these fluctuations would only take place based on the expectations of benefits or annual losses of the company, and not based on the potential changes of value that his company can suffer due to fusions, structural absorptions, or other changes.

These obligations would suppose a cost or a benefit for the companies, since in case of obtaining benefits at the end of the year they would have to remunerate them, and in case of having losses would have to penalize them year to year. In any case the company, with these titles or obligations of variable rent, would leave the system of remuneration of the small shareholder through the speculation with the value of its shares, but it would maintain a system of financing based on the results of the own company, and therefore with a variable cost that would depend on the own success of its activity in the annual exercise avoiding therefore the risk of assuming fixed financial costs.

A market of titles of private debt with variable rent would allow to accede to a real formation of the small investor in the values markets, it would teach him to distinguish the changes of quotation of the company shares which are based on their results , which are based on political decisions of the company, and through his annual remuneration or penalty it would provide a concrete and nonspeculative knowledge of the results of the company in which it has decided to invest. The obtaining of results year to year, would allow the bondholder to calculate an approximated value of the company and its shares based only on the historical results, in the same way that any small investor can calculate an approximated value of a rented house in function of the annual rent. A values market of this type would allow the small investor to accede to the share market with total conscience of its acts and consequences. Finally, but not less important, it would allow him to be consumer of the company in which he invests, being placed really in the status that corresponds to him.

4 - THE DEFENSE OF THE SMALL INVESTORS BEFORE INSOLVENCY CASES OF THE COMPANIES

In case of insolvency, payments suspension or bankruptcy, in a company does not exist a special regulation that protects the consumer nor the small shareholder. It only exists for a certain type of small investor, the Guarantee Funds of deposits and the Guarantee Fund of Investment, and still these had their existence thanks to the EU legislation that has been implemented in the national legislation (in Spain also outside the forced term of transposition) grudgingly, with the pression of the financial organizations to avoid contribute the corresponding funds for their constitution. (Note - 8)

(Note - 8). - The guarantee funds of deposits are created after the alarming situation of insolvency of Banesto, one of the five bigger banks in Spain in 1994, and again they have made a recent intervention, avoiding a new scandal in 2003, with the payments suspension of Eurobank. The guarantee fund of investments starts his operation in 2002, four years after it turned the term of transposition of the European norm that forced the nations to the creation of this fund, four years to obtain its creation by law, and its main regulation, the regulation of this fund that arises to solve the case of the insolvency of the Values Agency Gescartera that directly affects by familiar relation a member of the Ministry of Economy and Treasury, and the delay for the appearance of the regulation possibly is due to the pressing of the values agencies not to pay the indemnifications corresponding to the case of payments suspension of the Values Agency AVA, born in 1998, and in which the investors were devoid of the protection of this fund that corresponded to them. Now in 2004, these indemnifications begin to be paid.

An habitual consumer, before an insolvency situation of the company which owe a service or a good to him, or the return of the price of these, does not have in the Spanish legislation greater protection than another creditor, and of course the corresponding judicial procedure, the payments suspension or bankruptcy, supposes disproportionate costs for the consumer for the little probability of payment that usually accompanies these procedures. (Note 9)

(Note - 9) The crisis of the English academies in Spain has shown this problem, since the closing of the same ones has leaved their students without the corresponding course and without their money, it has been barely valued by the students going to the different payments suspensions of the same ones, due to the high cost of being in these judicial procedures. Even the possibility of trying to collect the money from those that have not declared the suspension of payments yet, is ignored, before the conscience they could interpose this judicial procedure, that is not but a defensive weapon for the insolvent company and not a procedure of defense of the consumer.

A small shareholder, before a situation of insolvency of his company, does not have any protection in the Spanish legislation. He cannot go to a procedure of suspension of payments or bankruptcy, because he is not a creditor but a proprietor of the insolvent company. In most of the cases he only alternative is trying to demonstrate before the judge that he is not really a shareholder. (Note 10)

(Note 10) In the case of the suspension of payments of Eurobank, in Spain, in 2003, only those shareholders who with the purchase of their shares of Eurobank, made by the advising of the commercials of the bank, obtained a commitment of repurchase of their shares by Eurobank have been beneficiaries of the Guarantee Fund of deposits and have been recognized as creditors in the Suspension of Payments. Thanks only to the commitment of repurchase of the actions that constitutes a debt of the bank to them, but not by the fact of being proprietors of titles that separate them from the situation of consumers to turn them professionals or proprietors of the bank. (Of course being shareholder of the bank did not suppose any additional information to them that it allowed them to anticipate the arrival of the suspension of payments).

A small investor or a client of a financial intermediary, in case of insolvency of this can be protected by the Guarantee Fund if he maintained his investment in products of the own intermediary (current deposits, accounts...) and in case of investing in shares, investment funds or another type of titles whenever the insolvency of the intermediary has been accompanied by some irregularity in the deposit and guards of these titles that entails a situation of nonliquidity for them.

Nevertheless in case of investing in insurances, the small investor leaves his condition of creditor of intermediary financial to turn creditor or client of an insurance company, in this case has better guarantees since resolution procedures of insolvency of insuring companies imply the participation of the Liquidator Commission of Insuring Organizations, which sells to other insuring companies those products with consumers which can be interesting, and assumes through the Compensation Partnership of Insurances the obligations with the consumers whose insurances could not have been sold to other companies, although in return lacks the protection of the Guarantee Funds.

In both cases, the protection of the Guarantee Funds of deposits and investments, and in the case of the intervention of the Liquidator Commission of Insuring Organizations, the principle of protection to the investor is the same one, that all the companies of the sector assume the damages of the insolvency caused by a company with the support of the State. But these systems do not solve satisfactorily the problems of the small investors, since in the case of agencies, values societies and credit organizations the indemnification that provide the Guarantee Fund, 20,000 Euro, do not respond to the real volume of the damages that can undergo the small investor and in addition this amount has not been updated as opposed to the life cost since the approbation of the European norm, and in the case of the insuring companies the insured is exposed to changes in the conditions and interpretations of their contracts when taking place the change of insuring after the liquidation of the initial company. (Note 11)

(Note 11) In 2001, the bankruptcy of the insuring AGB Life supposed the change of company for its insured, who become clients of Mutual Grouping (for policies with expiration after 2001, and those of expiration in 2001 were assumed by the Liquidator Commission of Insuring Organizations - CLEA -) for the same products, accident insurances with reimbursement of bonus, the CLEA followed the same criterion that in its day contract and followed AGB Life, but Mutual Grouping changed the interpretation paying 60% less of the agreed, forcing the insured to initiate new claims against the new company. These claims took two years to be gained.

The final manipulations of a financial intermediary before the insolvency situation require an analysis and monitoring special.

The multiple situations in which a small investor can be found before the insolvency of a financial intermediary are the ones that has pushed the consumer associations to become shareholder associations, contributors in investment funds in national and private debt and insured, and impositors. Because the defects of information and illegal manipulations of contracts and the relations with the clients of these financial intermediaries are multiplied as approaches the moment of making public their insolvency.

Some members of the sector of intermediaries financial think that indeed when an administrative intervention by the Institutions of Control of the Financial System takes place is when the criminal organization, which manages the future insolvent company, is when it feels more protected.

This apparent contradiction is based on the irregular actions that let being of penal nature to become administrative or civil, since although such things can be judged in the two ways, the instructional judges of the penal way normally will file the case as much it must be seen by the organism of control of the financial system, since this last one is considered more expert, waiting that this organism denounces any penile penal activity. In this way the inspecting and sanctioning procedures and their prolongation in the time are of great interest for the swindlers, since that legal situation provides them cover.

Necessary measures of protection for the small investors and shareholders.

In the first place from the consumer associations we vindicate the increase of the indemnification fixed by titling of the investment in the regulations of the Guarantee Funds of deposits and investments. The amount of 20.000 Euro has remained anchored from the constitution of the guarantee funds. These indemnifications are the fixed ones obligatorily as minims from the EU. It will be necessary also that the EU fixes the regime of updates of this amount? This indemnification is fixed on which is considered a logical investment of a small investor , but if it is not reviewed according to the cost of life it will lose her assignment.

Secondly, the Concursal legislation anticipated for the procedures of bankruptcy and suspension of payments of the companies it would have to gather a special section and informative treatment for consumers who become creditors, as well as for the defense of their interests. So that these can act in these procedures without undergoing high costs of lawyers and solicitors.

Thirdly, the procedures of intervention and inspection of the Institutions of Collective Investment, would become aware that the protection of the financial market is not protecting the companies of the appearance of scandals, but stopping the appearance of such putting into the hands of Penal Justice the performances of the companies as soon as crime indications are detected. And providing collaboration with justice with a serious analysis of the past performance of the company that has taken it to its final situation of insolvency, to locate the money deflection. Also one would analyze the authentic situation and nature of the investors, through the nature of his initial contracts until the end, since from unilateral form on the part of the insolvent company in many occasions address them in the last moments to new forms of investment that are even harm to the investors in their defense. (Note 12)

(Note 12). - The analysis of the operative of the insolvent organizations at their last moments is essential, in 2002, with the bankruptcy of Gescartera in Spain the privileged information of some enterprise clients was shown, they obtained important recoveries of their investments made before the public declaration of insolvency, still today in 2004, been left in freedom the chief of the organization, is not known where is the money swindled to the investors, and the collaboration in this field of the Control Institutions of the Financial Market (CNMV and National Bank of Spain) has not been able to give any explanation to this question, answering the judicial requirements more as defendant as part of the accusation.

In 1998, in the Suspension of Payments of AVA, a same type of investor, investing in such titles, could be found in a situation totally different as far as the recovery expectations of its money based on the organization that was communicated to him. The organizations deposits of the titles were communicated after the declaration of suspension of payments, never before, and still it suspects that the titles were manipulated benefiting and harming different clients based on personal interests. In 2003, the suspension of payments of Eurobank, placed, in the last months hundreds of investors as clients of the Mutual Insurances Companies involved with the bank, leaving them margin of protection of the Guarantee Funds and fixing in their contracts big penalties for the rescue of their money.

The protection of the small shareholder before the lack of experience of the investor in most of the countries in Europe, would be compensated with the audacity and boldness of the national courts in Europe, which would have to learn of performances of the courts in countries with greater stock-exchange tradition like the U.S.A., at the time of deciding to judge possible illegal manipulations of thevalue markets.

These manipulations exist in our markets, and are detectable since all the operations of transaction of shares are registered and are accessible by the Control Institutions of the Financial Markets. In case that these Institutions in their eagerness of protection of the Market do not denounce them, they would be the Courts of Justice those that required from these the necessary analyses to avoid these manipulations that harm all the small investors and shareholders. (Note 13)

(Note 13) In Spain in 2003, the case of TERRA was a scandal after the decision of its first and maximum shareholder, Telefónica, to repurchase the TERRA shares in less than half of the price in which it enter in the market few years ago. These TERRA shares got to multiply their value increasing from 12 Euro up to 150 Euro. The manipulations of the market through mass media and paid analysts were evident, and the benefits that obtained the advisors of the Board of Directors of Telefónica are still pending of analysis in a complaint interposed by the small shareholders and before which the judges fear to enter to known economic questions not knowing for them and mainly they fear to judge the performance in the values markets of the most powerful company in Spain.

5 - THE SHAREHOLDERS DEFENSE THROUGH CONSUMER ASSOCIATIONS OR SHAREHOLDERS
In Spain, scandals like the Values Agency AVA (1998), Investahorro (1999), Dinámica Directiva (2000), the Values Agency Gescartera (2001) all of them implied in insolvency situations bound to the investments in the values markets, have forced the consumers associations to take part directly in the defense of the investors whereas the defense of such was due to the bad performances of the financial intermediaries who served them. In this way the consumer associations, especially ADICAE acted in defense of the investors in their concept of users of services of financial intermediation.

However, the new scandals in Spain, like Recol Network (2002), titles of Argentine National debt (2003) and TERRA (2003), as well as Cirio and Parmalat (2002, and 2003) in Italy, have opened the discussion of whom is legitimized to defend, group, and associate these investors in the concept of small shareholders.

In Italy there are two classes of associations that have between their objectives the protection of the shareholders, first would be the consumer associations which on the basis of the Italian Law 281/98, that regulates the defense of the consumers are legitimized for the defense of the investors as users of financial services, and second they would be the associations of shareholders (Law 58/98 of Italy) These associations do not have to develop any enterprise performance, and must have at least 50 natural people as members, and is predicted that these associations participate in the decisions taking of the companies through the delegation of vote of the shareholders members of these associations.

In the French legal ordering is predicted (L225-120 Code of Commerce of France) the possibility of constituting associations of shareholders within the quoted societies, establishing requirements so that the same ones group minority stockholders. And also the Law of Spanish Stock companies anticipates the possibility that the minority stockholders of the same company group themselves in associations, being this one that informs and defends the rights of its members.

However in French and Spanish regulations, this forecast is addressed to the shareholders of a same company, not to the majority of the small shareholders. In the case of Spain, this has caused that at the moment the association that represents greater number of shareholders is the consumer association ADICAE with its own regimen as consumer association, and next to her only exist minority associations as ADA (Association for the Defense of the Shareholder), or the arisen ones in companies in crisis for the defense of their common interests (Banesto or Eurobank), that before the absence of a specific regulation are constituted as civil associations.

The appearance of shareholder associations, keep under different regimes has taken place in all Europe, as was demonstrated in the Worldwide Congress of Shareholders Organizations of Stockholm in 2005 to which it went by Spain, ADICAE. These organizations look for the defense of the shareholder through their vindications in the legislations of the values markets, as through the advising to such based on independent analyses generated by the own associations, as the representation of such in the decisions of the companies of which they are shareholders.

The defense of the rights of the small shareholders through consumer associations entails conflicts based on the rights of shareholders whom we take care of. As far as the information to the small shareholder previous to its decision to invest, of course the work of a consumer association cannot arrive beyond the comparative analysis cannot nor recommend any investment (in the same way that does not recommend the consumer of any product).

As far as the exercise of the political rights of the shareholders, a consumer association does not have nor can take the delegation of vote of its members for any subject of decision of the company, since that would be a participation of the consumer association in the policy of the company, but if it is possible the delegation of vote of its members, that are shareholders of the company at issue for the defense of concrete interests in which all of them agree.

As far as the defense of the economic interests of the shareholders, before situations of irregularity of the performances of the Board of Directors of the companies, the consumer associations have been disclosed as the only possibility of defense of the shareholders. Although the exercise of the shareholders rights against the administrators of a company in a Stock company is predicted legally, in the case of small shareholders the exercise of these rights is unattainable, since clear limitations as far as the percentage necessary exist to be able to get to question the performance of the Board of Directors. (Note 14)

(Note 14). - In 2002, the Recol Network company promoted the sale of its actions through professional college (doctors, dentists, lawyers, etc.), this company was undercapitalized in less than two years spending all its resources in computer science, in software and resources, and in publicity. The members of its Board of Directors had serious entailments with the company’s suppliers of Software and Publicity, as well as with some of the professional colleges that promoted the sale of these actions. Evidently a crossing of interests between the members of the Board of Directors took place, that allowed the fiasco of the company in benefit of their suppliers, but the small shareholders could not exert their society rights in any case because they did not reach the minimum percentage, and, the problem arrived to the penal courts, because the own members of the Board of Directors complained among them (the beneficiaries by the sale of software in front of the beneficiaries by the sale of publicity to Recol Network). In this case the lack of capacity of other types of organizations was disclosed, as are the professional colleges, that did not only know to defend the interests of his affiliated, but that in addition fell in the mistake to recommend the investment in a company outside the own competitions of a professional college.

Protection needs to the small shareholder not contemplated yet in the present legislation.

When a crisis in a company takes place, due to the manipulations of its Board of Directors the associations that are more effective for the defense of the interests of the small shareholders are the consumer associations due to their experience in next fields as it is the defense of the shareholders as users of services of intermediation. But although the situation created between small shareholders and the Board of Directors is next to the conflict between consumer and company, the legal instruments of defense are absolutely different and in the case of the small shareholders it is absolutely ineffective, independently of the type of association that groups and defends them.

Legal instruments of small shareholders are ineffective because come provided by the law of Stock companies, and in this law in good logic provides more defense to shareholder that contributes more to the society (that more actions has) and therefore has more interest in the success of the society. In this way, when the small shareholder has a problem with the Board of Directors of his company cannot make be worth his society rights, because the Board of Directors has as ally the majority shareholder. The key question is why the majority shareholder remain next to the Board of Directors that harms its own interests, and the evident answer is because although it harms his interests as shareholder of the company in return benefits him otherwise. (Note 15)

(Note 15). - In the TERRA case, its Board of Directors is indirectly people of its majority shareholder, Telefónica. Although Telefónica is the first harmed by the slope of quotation of the TERRA shares, also is necessary to consider, that when disappearing TERRA its market and activity, as well as its potential benefits are absorbed by Telefónica within its habitual activities. In this way, the intention of Telefónica when allowing that TERRA sinks is to harm itself as shareholder, but in return it benefits from absorbing the business of TERRA within his own company. Specially benefiting from the fiscal incentives of TERRA generated by its losses; due to since being absorbed by Telefónica this can enjoy such and that it supposes an attractive and simple incentive for Telefónica than trying to relaunch TERRA. In any case the other shareholders (small or medium) does not have this incentive since neither they are going to obtain fiscal benefits nor absorbing the enterprise activity of TERRA. Another question would be to know which is the benefit that obtained the financial intermediaries who were shareholders of TERRA to accede to sell their actions to a so low price, but in this case the compensation surely comes from the own commissions by operative with this type of shares, as well as future agreements with Telefónica for other operations of financial intermediation.

In the case of Recol Network, the majority shareholder were societies created previously to the creation of Recol Network by the own members of the Board of Directors, and since all the capital of the company (the one of its societies and the one of all the small shareholders that caught) went to companies suppliers of publicity and software (services very difficult to value as far as its authentic price of market) that also was into the hands of the members of the Board of Directors of Recol Network these recovered the capital of their societies (that not even was totally disbursed) and they benefited with the capital contributed by the small shareholders.

The legal instruments for the defense of the shareholders lack force when we talk about small shareholders, since these instruments really defend the majority shareholder. In this way to demonstrate the interests crossing in the Board of Directors only remain to the small shareholder the penal procedure, and even going to this one is difficult since most of the tests (audits, acts of the Meetings of Shareholders and meetings of the Board of Directors) are contributed by the presumed guilty.

The small shareholder no only needs information, which every time is better regulated and improve more through the reform of the Law of the Market of Values and Warrants of the CNMV in Spain, but in addition needs an external instrument of inspection that can emit valid information in case of necessity to go to the penal procedure about the possible crossing of interests in the decisions of the Board of Directors, which harm the company in exchange for benefits (to the majority shareholder or the own Board of Directors) other people's to the own company. The National Commission of the Market of Values in Spain, not only would have to surpass its timidity in the performances of inspection and intervention with respect to the financial intermediaries, but would require the legal authorization necessary to make inspections before accussation of the small shareholders in the society agreements and decisions of the Board of Directors of quoted companies that imply damages for the own society in exchange for indirect benefits (as provision of suppliers at prices outside the market, fiscal benefits, or to eliminate the concurrence) for the majority shareholders and the Board of Directors.

It is necessary effective instruments, of inspection and sanction, in the field of the Defense of the Concurrence, that allow consumers and shareholders, since the practices of disloyal concurrence not only take place through agreements between companies to fix prices and oligopolistic or monopolistic conditions to damage of the consumer, also take place practices of disloyal compentencia through the property of the shares of the companies of the concurrence. (Note 16)

(Note 16). - Service ADSL has been provided in Spain, during 2003, as much by TERRA as by Telefónica, being remarkably cheaper the offered one by this last one. This practice can seem even beneficial for the concurrence, but what really it implies is the collapse of the rival company (TERRA) from his interior through the property of Telefónica of most of the shares of TERRA as well as the control of his Board of Directors.

The Law of Stock companies must be reformed before the reality of the present values markets, since the principle of defense of the interests of each society must prioritize on the theory that the interests of the majority shareholder are such that those of the own society. In Telefónica and TERRA cases, it has been shown, as the interests of the majority shareholder, Telefónica, do not agree absolutely with the interests of the society, TERRA. And in the same way it could take place in the cases in which a first company is the main shareholder of filial companies which they have similar or parallel activities (that could develop their performance as much as independent company as a department of the first company) like for example Telefónica Móviles in relation to Telefónica, or BBVA Insurance in relation to BBVA Group, etc.

This reform of the Law of Stock companies would require, for those Societies that constitute a filial company of the majority shareholder, providing to the minority stockholders the same opportunities of the majority shareholder, in cases of crisis or situations of tendency to the disappearance of the filial Stock company. This reform would have to demand the Call of an Extraordinary Meeting of Shareholders, that could be summoned obligatorily before clear assumptions of tendency to the disappearance of the Society, at the request of the Institutions of Control of the Financial Market, or before the request of a minimum number of small shareholders (the percentage of shareholders to ask for it would have to be calculated on the number of shares which are into the hands of the public, and not on the total number of shares of the company).

The Order of the day of this Extraordinary Meeting of Shareholders, would have to include 1º the causes of the crisis of the filial Stock company, 2º the calculation of the costs to surpass the crisis of the Stock company, 3º the calculation of the losses for the different shareholders in case from dissolution or disappearance of the society. These losses would have to be calculated based on the price at which the actions were acquired, and would have to be deduced the benefits that the disappearance of the filial society can suppose indirectly for the majority shareholders (for example the fiscal benefits for Telefónica of the absorption of TERRA). 4º the plan or future decisions to surpass the crisis or to dissolve the Society. 5º. - In case of decision of dissolution of the filial Society, the liquidation of the same one would not have to be made based on the number of shares of each shareholder and his nominal value, but based on the cost or benefit that the dissolution of the society is going to suppose for each shareholder and of the antiquity of the shareholder.

In cases of crisis of the filial societies, the Act of this Meeting of Shareholders could be used by the small shareholder in the penal procedure, in case of considering that the declarations or calculations made in the Meeting do not adjust to the reality.

6. - THE PRESENT CLAIM SYSTEMS AND INVESTORS DEFENSE

Starting from the unquestionable legal and real concept of shareholder as consumer as far as his relations with the financial intermediaries, it is more necessary to carry far this protection, due to the lack of culture as shareholder. Because it is indeed in the "verbal intermediations", the advice and the bad information received from the financial intermediaries (Banks and Savings banks) that at the same time offers deposits, insurances, investment funds, shares, and all type of investments, those that induce the economizer to serious mistakes. Being difficult its defense because the financial services organizations do not accept a system of resolution of conflicts in fairness, with physical presence, where the financial organizations must respond personally (not in writing) of the "easy words" of their commercial ones, and where the problems linked to banking products, investment and insurances can be joint in a single conflict, not as it happens at the moment with different Claim Services.

The present Services and Commissioners of claim do not solve only problems nor take part before important situations, but also transmits the claims from a Service to another one, staying out to give answer, instead of offering a joint answer and in collaboration. (Note 17).

(Note 17) In Spain, there are examples of this daily behaviour of Services and Commissioners of claim: An individual asks to the National Bank of Spain that demands to BSCH that explains the way of cancellation of two hypothecating loans. As to cancel these loans two investment funds have been sold, the National Bank of Spain, transmits the claim to the CNMV, this responds with the information provided by BSCH explaining how one of both loans has been cancelled, months later the National Bank of Spain answers the user with the same information. But neither of both Services of Claims asked for information of how the second loan had been cancelled to BSCH.

Representatives of the financial intermediaries have recognized that a problem of interests between the own financial organization and its employees exists. The first one is interest in solving the conflicts with the greatest speed fideliting his clients, whereas the employees before a mistake committed by they can fear that labour measures are taken before them.

It is necessary a proximity and speed in the resolution of conflicts, for which delegations of these Commissioners by provinces should be created. This would facilitate the user the defense of being able to ask for in his favour the declaration of employee of the financial organization and would provide greater speed in the collaboration between the commissioners when from the declarations of the user the conjunction of problems with financial products (banking, values and insurances) was evident. The creation of these delegations would not either prevent to improve the speed of these procedures being able to take as sample the experience of the arbitration boards of consumers, in which can be made the arbitration view through Internet when it seems to be adecuated.

The Commissioners of defense of the user of financial services, settled down in Spain through the financial law, should have to allow the real representation of the consumer and users representatives to obtain not link between the services or commissioners of claim and the institutions of control of the financial market, because they have opposed interests (the defense of the investor and the defense of the market and its organizations) and in many cases even responsibilities in the damages that cause to the consumer (like the contract acceptance which later demonstrates itself in the courts that are abusive). (Note 18)

(Note 18). - In the case of Spain in 2003 and 2004, from the Suspension of Payments of Eurobank and the Catalan Mutual Insurances linked to this bank, it is difficult that the Main Directorate of Insurances of Mutual Catalunya takes part against the Catalans Insurances on the penalties that affects to the consumer in the rescue of their insurance policies Unit Linked, because these policies really are not Unit Linked contracts (they do not offer an investment product net, and it is not possible either value the results of the investment because this in its majority is addressed to Obligations of an Organization with address in Luxembourg that does not quote in any market) and nevertheless the Main Directorate of Insurances of Catalunya it had to admit in these days the legality of this product and allow commercializing on the part of Eurobank, and therefore the Main Directorate of Insurances of Catalunya has a responsibility opposed to the investor/consumer who acquired this type of policies.

In the cases of structured deposits, the CNMV in Spain considered as bad practice the deposits commercialized by Caja Rural of Valencia (whose prejudice to the consumers is still put under the courts), but before similar deposits as those of Savings bank of Navarre or BBVA did not consider them like bad practice, although the result of such is similar (only in the case of Savings bank of Navarre it dared to sanction the bank for not publishing the informative brochure of the product) because these last ones are shaped in two contracts that the consumer/investor signs at the same time, and in this way is avoided that the clauses of a contract are abusive forehead to the content from the other contract. In this case it is possible to ask itself in which situation will be left the CNMV if the courts pronounce themselves against the deposits commercialized by Savings Bank of Navarre and BBVA. For what is useful its work as Control Institution of the Values Market, if it has not made any decision before a case with hundreds of claims.

In what situation is the National Bank of Spain, after the consultation made on the credits of the English academies and its entailment to nonserved services. It answered that it have not arguments to consider them linked to the service, whereas the different courts in Spain are sentencing these contracts as linked. For what has served the performance of the National Bank of Spain as Control Institution of the credit organizations?