Securities litigation: Court refuses to strike out "common reliance" and "dishonest delay" claims

In a significant development for securities litigation, the High Court has refused to strike out claims based on "common reliance" (or "price/market reliance") and "dishonest delay" in Various Claimants v Standard Chartered plc [2025] EWHC 698 (Ch). This decision marks a notable departure from last year's ruling in another securities litigation decision (you can find our analysis of that decision here). 

Background and application

The case involves claims brought by 217 claimants (representing approximately 1,391 funds) claiming around £1.5 billion from Standard Chartered PLC. The claimants allege liability under section 90A and Schedule 10A of FSMA for alleged untrue or misleading statements in, and/or omissions from, information published by Standard Chartered between February 2007 and April 2019.

The claimants also bring claims under section 90 FSMA in respect of three rights issue prospectuses. There are 167 claimants that bring these claims, which were not subject to this application and will proceed to trial in any event.

Standard Chartered applied to strike out two categories of claims:

1. Common Reliance Claims - where claimants had not read or directly relied on the published information but claimed reliance on the market price of shares, which was influenced by the allegedly misleading published information.
2. Dishonest Delay Claims - claims under paragraph 5 of Schedule 10A FSMA alleging dishonest delay in publishing information.

Standard Chartered's application was based largely on Leech J's previous decision (discussed here), where similar claims were struck out. If successful, this would have removed 949 funds from the claim, representing 68% of the total number of funds with a claim value of approximately £762 million (49% of the total claim value).

The decision on Common Reliance Claims

Paragraph 3 of Schedule 10A FSMA, requires claimants to show they "acquired, continued to hold or disposed of the securities in reliance on published information".

In a prior decision, Leech J concluded that Parliament intended to adopt the common law test for reliance in the tort of deceit, requiring claimants to have read or heard the representation and understood it in the sense alleged to be false.

Green J distinguished the present case on several grounds:

1. Some claimants had pleaded a positive "belief" that the share price reflected published information being true and complete, rather than merely "proceeding on the basis" of this.
2. The extensive reliance on implied representations in the present case.
3. The relationship between indirect/conduit reliance and common reliance claims based on price is "not easy to draw".

The judge also expressed doubts about whether Parliament intended to adopt the common law test for reliance wholesale, particularly given complications with applying a consistent test to both misstatements and omissions.

Green J concluded that this remains "a developing area of law" where the parameters of the common law test are not fully established. He considered that expert evidence regarding how published information affects market price and influences investment decisions should be heard at trial before determining these complex issues.

The decision on dishonest delay claims

Paragraph 5 of Schedule 10A FSMA provides for liability where a person suffers loss "as a result of delay by the issuer in publishing information".

In a prior decision, Leech J held that this only imposes liability if the issuer has actually later published the delayed information by recognised means.

In the present case, Green J stated:

"I have to say that I have more doubts about whether Leech J was correct to conclude that dishonest delay claims are dependent on the issuer publishing corrective information at some stage".

Green J questioned whether such a requirement necessarily fits with the objective of imposing liability for dishonest delay, noting it could provide "a perverse incentive on an issuer not to publish the corrective information so as to avoid liability".  This would undermine the legislation's purpose of encouraging "accurate, comprehensive and timely information" being disclosed to the market.

The judge also found the wording of Paragraph 5 does not explicitly mention any requirement for subsequent publication. He observed that Professor Davies' original discussion paper had identified the mischief as there being no liability where there is a "failure to make any statement at all" - making it odd to fill that lacuna by making liability dependent on a later statement being made.

In any event, it was found that in the present case, the Claimants’ Delay Claims were expressly limited to the period ending 9 April 2019, when Standard Chartered published information including the outcome of the 2019 Settlements, which potentially satisfied the publication requirement even on Leech J's analysis.

Case management considerations

Green J noted several practical considerations that influenced his decision:

1. The application would not obviate the need for a substantial trial, as claims worth approximately £877 million would proceed in any event.
2. The trial has been listed for 76 days, and Standard Chartered had previously acknowledged that the Common Reliance Claims would not materially increase the duration, costs, or complexity of that trial.
3. The parties had already invested time and costs in preparing these claims for trial following previous case management directions.
4. The potential cost savings from striking out the claims (estimated at over £1 million) represented a relatively small fraction of the overall anticipated litigation costs.

Implications for securities litigation

This judgment represents a significant development in UK securities litigation:

1. It adopts a more cautious approach to striking out claims in this evolving area of law, preferring to allow full factual and expert evidence to be considered at trial.
2. It suggests that the "fraud on the market" theory, while not explicitly endorsed, may not be definitively foreclosed in UK securities litigation.
3. It raises important questions about the proper construction of both reliance requirements under paragraph 3 and dishonest delay provisions under paragraph 5 of Schedule 10A FSMA.
4. It emphasises the fact-sensitive nature of these inquiries, suggesting courts may be reluctant to adopt bright-line rules in this area.
5. It highlights the importance of precise pleadings in securities litigation. Green J specifically addressed the adequacy of the parties' pleadings, noting that "the parties may well need to look at their pleadings in relation to both of these Claims and ensure that they cover everything that they wish to rely on at trial".