Introduction
Can a securities claim based on market reliance be struck out early? Not yet, said the High Court in Various Claimants v Standard Chartered PLC — declining to follow the approach in Allianz Funds v Barclays plc [2024] EWHC 2710 (Ch) ("Barclays") and keeping alive over £750 million of 'common reliance claims' under paragraph 3 of Schedule 10A to the Financial Services and Markets Act 2000 (“FSMA”).
What are 'common reliance claims'?
These claims, also known as 'fraud on the market', assert that investors did not read the company's published information, instead relying on the wider market to have considered it and to have set the price of the company's shares on the basis that it was true and accurate. The claimants argue that they acquired or held shares in reliance on the share price, and that they were induced to do so at a false and artificial price.
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Standard Chartered sought to replicate the outcome in Barclays, where claims based on this theory were struck out, but Green J declined to follow suit. Despite acknowledging the logical force of Barclays, he concluded that the scope and meaning of “reliance” under Schedule 10A FSMA is a developing area of law better resolved at trial.
The decision is a practical reminder that judicial comity does not amount to blind adherence. It also preserves a significant sum of ongoing securities litigation, signalling that the courts remain cautious about prematurely shutting down complex claims.
Key takeaways
- Barclays is not gospel (yet): The judgment draws a clear line - while Barclays is important authority, the court retained its discretion in applying developing law.
- Judicial comity has limits: Green J recognised the need for coherence, consistency and predictability and was not convinced that the decision in Barclays was wrong, but nevertheless found that it was open to him to leave the issue to be determined at trial – both as a matter of case management, but also because of his uncertainty as to the correct answer to the legal question.
- Litigation efficiency is not enough: Despite Standard Chartered’s argument that striking out would eliminate nearly half the claim’s value, Green J found that the costs saved were not significant relative to the broader litigation.
- 'Common reliance' is not dead: The 'fraud on the market' theory remains arguable, at least for now. Litigants can argue that reliance on share price — as a proxy for reliance on published information — may satisfy the statutory test under Schedule 10A.
- Expert and factual evidence will be key: The court emphasised that live issues on market efficiency, investor behaviour and causation require proper factual investigation at trial.
Background
The claims
The case involves 217 claimants representing 1,391 funds, seeking approximately £1.5 billion under FSMA for losses arising out of alleged misleading statements and omissions in published information, as well as dishonest delay in publishing corrective information.
The claimants advance three types of claims under FSMA:
- s.90 claims – for misleading statements in prospectuses (no reliance required);
- Paragraph 3 claims – for untrue or misleading published information (requires reliance);
- Paragraph 5 claims – for dishonest delay in correcting that information (no reliance required) ("Paragraph 5").
The focus here is on 'common reliance claims' under paragraph 3 of Schedule 10A FSMA ("Paragraph 3").
Barclays
In Barclays, Leech J held that claims under Paragraph 3 require proof akin to the common law test for deceit — i.e., that the claimant actually read or was aware of at least the gist of the alleged misstatement, perhaps through their agent, understood it in the sense in which it was alleged to be false and that it caused them to act in a way which caused them loss. He rejected 'fraud on the market' reliance.
Standard Chartered sought to rely on that ruling to strike out nearly 950 claims worth £762 million, arguing the reliance requirement under FSMA could not be satisfied by claimants who did not directly read or consider the published information.
The High Court’s decision
Green J declined Standard Chartered's application for strike-out or summary judgment, citing three principal reasons:
- Developing area of law: The meaning of “reliance” in Paragraph 3 has not been definitively settled. While Barclays is persuasive, it was the first case to consider the issue in detail, and it settled before appeal.
- Substantial factual dispute: The court accepted that expert evidence on market efficiency, investor behaviour, and the causal link between price and disclosure could materially impact the analysis. The claimants had already served preliminary expert reports and relied on evidence from institutional investors to show they based decisions on share prices influenced by market disclosure.
- No real procedural advantage: Despite the scale of the claims targeted, the court found that a strike-out would not significantly streamline the litigation. The remaining claims were proceeding to a 76-day trial regardless. The court noted that the claimants' Paragraph 5 claims do not require proof of reliance. Even if the common reliance claims were struck out, these claims for dishonest delay in correcting earlier disclosures would proceed. Standard Chartered’s attempt to categorise them as a “repackaged” version of the Paragraph 3 claims was rejected at this stage. Green J held that these claims raise distinct issues about the alleged dishonest failure to correct earlier disclosures — issues that warrant full factual exploration at trial.
Unlike in Barclays, some claimants in Standard Chartered pleaded a specific belief that market prices reflected true and complete published information. This distinction may prove important if reliance is treated as a factual, investor-specific inquiry.
Conclusion: Not the final word on 'fraud on the market'
This judgment keeps the door ajar for market-based reliance in UK securities litigation — at least pending full trial and potentially appellate review. As a matter of judicial discipline, it also affirms that a novel legal point, even if persuasively addressed by another judge, is not a licence for shortcutting litigation when substantial factual issues remain.
For litigation practitioners, Standard Chartered reinforces the value of robust factual development and the strategic use of expert evidence. It also cautions against overreliance on interim decisions like Barclays, particularly in areas of law still under construction.
As more securities claims advance, the courts will be forced to grapple with how modern markets — driven by algorithms, indices, and passive investing — intersect with legal concepts like reliance and inducement.
