In a judgment handed down this week in Persons Identified in Schedule 1 v Standard Chartered PLC [2025] EWHC 698 (Ch), the High Court refused to strike out or grant reverse summary judgment in respect of certain claims brought under s90A and Sch. 10A of the Financial Services & Markets Act 2000 (FSMA). The claims will now proceed to trial. 

Background

The relevant claims were brought against Standard Chartered PLC (SC PLC) following corporate misconduct involving: (i) settlements reached with the SEC in 2012 and 2019 relating to sanctions breaches; (ii) a final notice issued by the FCA in relation to anti-money laundering failings; and (iii) allegations of bribery in an entity partially owned by SC PLC. 

The claimants are investors in SC PLC claiming they suffered loss due to: (a) alleged untrue or misleading statements in and/or omissions from SC PLC’s published information; and (b) alleged dishonest delay in publishing information. These claims relate to the corporate misconduct set out above (i.e. that SC PLC did not disclose the misconduct at the time it was happening).

SC PLC applied for strike out and/or reverse summary judgment on: 

1. Common Reliance Claims: claims brought by funds that do not claim to have reviewed or considered SC PLC’s information but instead rely on the concept of “price/market reliance” or “fraud on the market” (the Common Reliance Claims). This assumes that the market set SC PLC’s share price to reflect SC PLC’s published information, which it alleges was misleading and/or contained omissions. These claimants are predominantly tracker funds and other passive investment vehicles. They account for half the value of the overall claim. 
2. Delay Claims: claims that SC PLC dishonestly delayed publication of information relating to the misconduct (the Delay Claims).

Last year we commented on a similar case (Allianz Funds Multi-Strategy Trust & ors v Barclays Plc [2024] EWHC 2710 (Ch)), in which the Court did grant reverse summary judgment dismissing claims:

1. brought by passive investors relying on the market price of Barclays’ shares as a reflection of its published information, given that they could not show that they had actually considered and “relied” upon the relevant published information; and 
2. for dishonest delay in publication of the true position in that case, in circumstances where the true position had never actually been the subject of published information. 

Decision

Despite the approach adopted in Barclays, perhaps unexpectedly in this case the Court did not find in favour of SC PLC. 

The Court declined to grant reverse summary judgment on the Common Reliance Claims on the basis that:

• reliance in the context of s90A FSMA claims is a developing area of law and disputed legal questions of this nature should be resolved on the facts established at trial, rather than on a hypothetical basis before trial;
• while the judge was “not convinced” that the judge in Barclays was wrong in concluding that passive investors cannot be taken to have relied on published information for purpose of s90A FSMA, he thought it was at least arguable that the test for reliance in s90A FSMA claims is broader than Barclays concluded;
• the judge also acknowledged that while it may be an “uphill struggle” for the passive investor claimants, he thought they should have the opportunity of putting the Common Reliance Claims forward at trial, so that a decision could be taken on all available evidence; and 
• from the consultations/reviews conducted prior to the introduction of s90A FSMA, there was a clear desire to avoid “speculative US style securities litigation”. One limiting factor on speculative claims is that a claimant needs to prove “dishonesty” to bring a claim. Whether “reliance” is also a control on speculative litigation needs to be explored at trial. 

The Court declined to grant reverse summary judgment on the Delay Claims on the basis that:

• the judge expressed more doubts about whether Barclays was correct to conclude that dishonest delay claims are dependent on an issuer publishing corrective information (i.e., that there can be no delay unless there is at some point published information that sets out the true position); and
• the Delay Claims under s90A FSMA are novel and have not previously been tested in any court. The judge concluded that it would therefore be better for them to be determined on the basis of full facts at trial. 

Comment

This judgment should not be read as a wholesale disagreement with Barclays. Rather, the judge considered it preferable for the issues to be determined at trial and not at a preliminary stage. 

Regarding the Common Reliance Claims, the judge indicated that while the meaning of “reliance” for a s90A FSMA claim may be broader than under the common law, claimants are likely to face significant challenges at trial. He emphasised that the UK legal framework for shareholder actions is not intended to give rise to widespread speculative claims of the type seen in the US. 

As indicated in the Barclays case, investors will need to prove that they in fact read the allegedly misleading information, understood the information in the sense that is alleged to be false, and acted on it in a way that caused loss. Whilst this will be tested further at trial (or possibly on appeal), investors claiming losses due to a general “fraud on the market” arising from misleading published information, which is likely to include passive investors such as tracker funds, will find it difficult to prove their case. 

Follow-on shareholder claims of this nature are picking up pace, but as yet no multi-claimant s90A FSMA claim has been determined at trial. This is, therefore, very much a developing area. Whilst claimants may hope s90A FSMA claims are a sure route to compensation, the courts will take care to ensure that the scope of claims is not expanded beyond its intended limits. 

More broadly, the Government’s approach to the promotion of business growth and efforts to revive listings on London’s stock market may exert a public policy influence that will limit shareholder claims. This could support maintaining the existing view that only investors who have actually read and relied upon misleading information can bring claims, rather than broadening the pool of possible claimants.