High Court rejects "price/market reliance" for s.90A and Schedule 10A FSMA claims

The High Court has granted reverse summary judgment for certain claims brought by institutional investors against Barclays plc under s.90A and Schedule 10A of the Financial Services and Markets Act 2000 (FSMA) for various alleged misrepresentations or omissions in published information: Allianz Funds Multi-Strategy Trust v Barclays plc [2024] EWHC 2710 (Ch).

The court considered for the first time whether “price/market reliance" satisfies the reliance requirement under s.90A/Schedule 10A FSMA. It ultimately dismissed claims brought by 241 funds who had not read or considered the published information alleged to contain misstatements or omissions when deciding to buy, hold or sell Barclays' shares.

The court also held that liability for dishonest delay attaches to an issuer only where there has been a late publication; it does not apply where there has been a failure to publish the information at all. This would only give rise to a claim for an omission, for which reliance on the published information must be proved. Approximately 60% of the total quantum of the claims have now been struck out.

The decision is likely to significantly limit s.90A/Schedule 10A claims by "passive" shareholders who do not actively manage their investment portfolios. Since reliance can only be satisfied if investors have read the published material, such passive shareholders have no cause of action under s.90A/Schedule 10A FSMA. Additionally, if an issuer has never published the relevant information, this only gives rise to an action for an omission, not dishonest delay. The decision is likely to reduce the attractiveness of these claims for investors and those who fund these claims as claimants will need to prove they actually read or considered the relevant published information. It is therefore a welcome development from the perspective of listed issuers.

For more information see this post on our Banking Litigation Notes blog.