Securities Litigation

The UK courts have accommodated the bringing of group actions (whether pursuant to a Group Litigation Order (GLO) or otherwise) and there are now well-established claimant law firms, backed by third party litigation funders, who can quickly mobilise to present claim opportunities to shareholders on a largely “risk free” basis. In this way, large numbers of institutional and retail investors are encouraged to join forces and pursue claims on the basis that they share any proceeds with the funders and lawyers in return for not having to pay the costs of pursuing the claims or any adverse costs should they be unsuccessful. By aggregating claims in this way, the overall damages sought can be very substantial, with funding in place to pursue them to trial if necessary. Securities litigation has been big business in the US for many years and the UK market is following suit.

When listed companies suffer a significant financial under-performance, accounting issues or make various public commitments (for example about sustainability), claimant law firms and shareholders will analyse whether any claims can be brought against the company and its directors.

In this report, we explore the regulatory considerations, types of claims typically available to shareholders, and some of the key risks that arise based on our experience of defending such claims.

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