For Scalable Capital, the digital asset manager based in Munich, there are currently two numbers that count.

For the first time, the company has exceeded the threshold of ten billion euros in customer funds.

Scalable was able to reach this mark, which company boss Erik Podzuweit called a “milestone”, at a rapid pace: According to its own statements, five billion euros in investor funds were added within just one year.

Around 600,000 customers now place their trust in the fintech, which is active in Germany and four other European markets.

Marcus Young

Editor in Business.

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Despite all the euphoria, people in Munich know that investor confidence can change.

In October 2020, the online broker had to admit a data protection incident.

It was revealed that unauthorized persons had gained access to personal information, such as addresses, tax and custody information, of more than 33,000 active and former Scalable customers.

In view of the obligations under the EU General Data Protection Regulation (GDPR) and the strict liability regulations, this is a risk for the robo advisor that should not be underestimated.

In December 2021, a plaintiff, supported by the legal service provider EuGD, sued Scalable for immaterial damages under the GDPR before the Munich I Regional Court.

As the FAZ reported at the time, a civil chamber granted the former customer a sum of 2,500 euros after Scalable had to admit a security gap in its cloud environment.

In the assessment, the district court took into account that the data had apparently not yet been misused.

At the same time, however, one wanted to take into account the "deterrent effect" of compensation intended by the legislator (Az. 31 O 16606/20).

No binding effect for other courts

As has now become known, Scalable withdrew its appeal against the decision before the Munich Higher Regional Court in July - as far as is known, this is the first legally binding judgment for damages due to the data leak (Az. 36 U 138/22).

Even if this decision has no binding effect on other proceedings, it sends a signal, says plaintiff attorney Diana Ettig.

“So far, German courts have been rather reluctant to award compensation for immaterial damage.

This has now changed, especially since the Higher Regional Court indicated during the oral hearing that it might decide the appeal in favor of the plaintiff and is considering admitting an appeal to the Federal Court of Justice," explains Ettig.

The legal service provider EuGD, who retains 25 percent of the sum won in the event of success,

When asked, a spokeswoman for Scalable emphasized that so far no case is known in which a customer has suffered material damage from the data incident.

"The relevant questions therefore revolve around the existence and the amount of immaterial damages." According to the Neobrokers, other courts assume at most "symbolic amounts" for affected customers.

In addition, a number of questions regarding the existence of the claim for damages and its amount have not yet been finally clarified by the courts.