Kapitalanleger - Musterverfahrensgesetz (KapMuG)

The German Capital Markets Model Case Act (KapMuG), in effect since November 1, 2005, has introduced group litigation to German securities law. Felix Bergmeister compares and contrasts this new device with the U.S. securities class action and analyzes the extent to which the regulatory goals of the statute have been accomplished. He finds that it falls short on two essential levels: It does not relieve courts of their heavy caseloads, nor does it, as it set out to do, create sufficient incentives for investors to join a KapMuG proceeding. He goes on to discuss the options for improving the KapMuG and, after rejecting the implementation of U.S.-style class actions in Germany, details a proposal for legislative reform.