A consent order was filed at court on 18 December 2024 dismissing the proceedings brought by Allianz and others against Barclays PLC (“Allianz & Ors v Barclays”) following a confidential settlement between the parties. The settlement follows the controversial decision by Mr Justice Leech on 27 November 2024 to refuse the claimants’ application for permission to appeal his judgment striking out claims brought by 241 index fund claimants and all claims for dishonest delay under section 90A/Schedule 10A of the Financial Services and Markets Act 2000 (“FSMA”) worth £330m.

Given the judge’s decision in Allianz & Ors v Barclays, the settlement is unsurprising and represents a successful conclusion to the case for the claimants. That said, in terms of case law, the timing of the settlement (prior to any appeal) is unfortunate given that for now, Mr Justice Leech’s decision represents the current state of the law on market/price reliance and dishonest delay. However, the prospect of further strike-out applications considering the same issues due to be heard next year means this is unlikely to be the last word on the subject.

Lorraine Lanceley and Harry McGowan provide a brief update in this article.

Background

On 25 October 2024, Mr Justice Leech handed down his pivotal first-instance summary judgment, which considered for the first time whether market/price reliance would satisfy the reliance requirement in section 90A/Schedule 10A of FSMA and thereby give index and algorithmic funds a remedy under English law for misleading and/or material omissions made by companies in statements to the financial markets. The decision also considered for the first time how Schedule 5 of Schedule 10A, concerning the dishonest delay of publication of inside information, should be interpreted and applied.

Our previous article considered this decision, the background to it and its significance for the landscape of securities litigation.

Consequential issues were heard at the third case management conference (“CMC”), which took place between 25-27 November 2024 and included an application by the claimants to appeal the first-instance decision to the Court of Appeal.

On 27 November 2024, Mr Justice Leech denied that application. The refusal was disappointing in circumstances where the application concerned novel points of law and where the decision would likely have had significant ramification for securities claims as a whole and investor protection in England more broadly.

The CMC order (dated 17 December 2024, the same day the case settled) provided that the claimants pay the defendant’s costs of the strike-out application (on the standard basis) to be the subject of an immediate detailed assessment (to be stayed pending any application for permission to the Court of Appeal) and the claimants were ordered to pay Barclays £280,000 by 20 December 2024 on account of such costs. The claimants were also ordered to pay the non-common costs incurred by Barclays (plus interest) resulting from the strike-out application to be subject to detailed assessment at the conclusion of the proceedings.

Settlement and looking forward

On 18 December 2024, the parties filed a consent order at court (which was sealed the same day) dismissing the proceedings in their entirety on the basis that the parties had reached a confidential settlement on 17 December 2024. The consent order provided that there would be no order as to costs.

Given Mr Justice Leech’s decision to allow the strike-out application on 25 October 2024 and the fact that he then refused permission to appeal his decision at the first-instance stage at the CMC at the end of November 2024, it is unsurprising the case has settled at this juncture. The settlement no doubt represents a successful outcome for the claimants, notwithstanding Mr Justice Leech’s two decisions, and sends a positive message to investors that these cases are capable of early settlement when the conditions are right.

Having said that, a settlement at this stage (prior to any appeal) is unhelpful as it prevents the claimants from seeking to overturn Mr Justice Leech’s decision. While Mr Justice Leech refused permission to appeal at the CMC, the claimants were still entitled to renew their application for permission directly to the Court of Appeal.

The upshot is that, at least for the time being, Mr Justice Leech’s first instance decision represents the current state of the law on market/price reliance and dishonest delay.

However, we are aware there are other cases where the same issues are in dispute and strike-out applications have either been brought or threatened. In particular, the defendant in Various Claimants v Standard Chartered PLC has applied for strike-out on the same basis (this application having been made almost immediately following the Barclays decision). We understand this is due to be heard in a three-day window beginning 10 February 2025 (which includes one day of reading). As such, the Barclays decision is unlikely to remain the last word on these important investor protection issues for long.

The Barclays decision is likely to reinforce to institutional investors that the UK offers them far less protection against corrupt directors than the USA and Australia and therefore additional returns are required for the increased risk of investing on the London Stock Exchange. Decisions like the one in Barclays are unlikely to help attract investors to the UK, which is key if the fortunes of the London Stock Exchange are to be turned around after having its worst year for net outflow of companies (88 companies delisted or transferred their primary listing against 18 taking their place) since the financial crisis. If the UK government is serious about attracting institutional investment into the UK, it must ensure its investor protection legislation is at least on par with its competitors.