Every year the senior courts issue thousands of judgments, which our reporters assess for their legal significance as precedents. Only a few hundred are selected for reporting, and that is because they change or clarify the law in some way. While the other judgments are published, and may be of interest for various other reasons, they do not merit selection as precedents.

In this short series of commentaries reporters from the different divisions at ICLR have chosen a case that they believe truly changed the legal landscape in 2024.

In the below piece Krishen Soogumaran, who sits in our Chancery reporting team, assesses the impact of Allianz Funds Multi-Strategy Trust v Barclays Plc [2024] EWHC 2710 (Ch); [2024] WLR(D) 504. This case is interesting as it emphasises the importance of claimants properly making out the necessary ingredients of a section 90A of the Financial Services and Markets Act 2000, and broadly, highlights a distinguishing feature of the English law position on shareholder actions, in contrast to the US position.

Facts and Decision

Here, claimants all represented or constituted investment funds and sub-funds which traded ordinary shares issued by the defendant bank, Barclays Plc. They commenced proceedings against the bank pursuant to section 90A of and Schedule 10A to the 2000 Act, seeking damages for losses allegedly suffered as a result of untrue or misleading statements in the bank’s published information, and dishonest delay and/or omission in the publication of information. In proving loss, the claimants relied on a fall in the market value of their shares following the publication of a complaint about the bank’s trading systems made by the Attorney General of the State of New York, and an order made against the bank by the US Securities and Exchange Commission. The bank applied to strike out certain claims or alternatively for reverse summary judgment in respect of those claims, contending that:

(1) a category of claimants which had not considered the bank’s published information had not pleaded, and could not prove, that they continued to hold or had disposed of the shares in reliance on published information, satisfying paragraph 3 of Schedule 10A to the 2000 Act, and

(2) the claimants had not pleaded, and could not prove, that they had suffered loss as a result of a dishonest delay by the bank in publishing information under paragraph 5 of Schedule 10A to the 2000 Act.

The court held that

(1) claimants must be able to prove they relied on the published information itself, which here a category of passive investor claimants could not demonstrate; and

(2) information relied on by the claimants had been published, which here had not taken place.

Analysis

This decision stresses the importance of identifying and pleading the specific statements relied on, alongside the impact those specific statements had on their investment decision. Further, it is a rejection of the US law concept known as “fraud on the market” theory, which is a rebuttable presumption whereby the relevant statement made by the issuer is presumed to have caused losses to investors, operating on the assumption that investors rely on all available information when transacting at market prices. In practice, this means a US plaintiff does not carry the burden of having to plead individualised reliance for each class member, even if circumstances where that investors were not aware of, and did not rely on, the published misstatement. As such, until an appeal is heard, UK claimants have a higher threshold to meet should they wish to bring a claim under s.90A of the 2000 Act.

 

Krishen Soogumaran, Barrister

Featured image: Stock exchange photo by Pixabay (via Pexels).