The UK is one of the largest jurisdictions for collective redress, with a highly regarded judiciary, long-established procedural framework, mature funding market and an increasing body of legal authorities. While some may argue that this growth demonstrates that the UK is becoming an irrationally litigious society, it could also be said that the UK is simply continuing its lauded tradition of offering a means for those who have suffered loss to achieve redress from those who have caused that loss.
This is demonstrated with the evolution and growth of securities litigation. What began as tentative steps around RBS and Tesco has matured into a repeatable, increasingly sophisticated pathway for institutional investors and public pension funds to pursue meaningful recoveries against issuers who mislead the market.
Securities litigation can be divided into two categories: derivative and unfair prejudice claims; and claims brought pursuant to sections 90 and 90A of the Financial Services and Markets Act 2000 (FSMA).
Of these two categories, the latter has seen huge developments. FSMA has been around for years, so the sudden and recent growth might be surprising. However, it was not until 2022 that the first reported judgment on these provisions was made in ACL Netherlands BV v Lynch, better known as the ‘Autonomy litigation’, and more recently, a quantum judgment in that same claim.
But the increasing body of judicial authority is not the only driver for growth.
There are many articles on the growth of third-party funding and its impact on litigation. But it is equally relevant to highlight that developments in the way securities litigation is managed – from case inception to judgment – have simplified, relieving the burden on investors who wish to participate in a claim (and their lawyers).
More recently, we have seen a fundamental shift in the way these claims are funded. One of the most prominent trends is a movement away from the more traditional model of individual funding agreements to law firm or portfolio funding. This brings a number of benefits to those operating in this market.
First, it goes without saying that third-party funding and after-the-event (ATE) insurance mean participation does not require capital outlay; economics are structured to align interests and protect investors from downside risk.
Second, the costs and fee structure are streamlined and simplified. A shift from individualised funding agreements means investors can now clearly understand the terms proposed and make an informed determination whether to join a claim.
Third, claimants and claimant lawyers alike will be well versed in the difficulties of onboarding multiple parties where there is rightly an obligation and necessity to explain and understand complex management and funding arrangements. But a simplified funding arrangement means a simplified sign-up, a boon to any busy institutional investor.
But, again, whereas the availability of funding and better claims management are important catalysts for this evolving area, there is more to the story.
The securities litigation regime is increasingly recognised as a vital part of business. With asset owners facing growing scrutiny over how they protect beneficiaries, participating in well-structured securities claims demonstrates proactive governance and accountability.
Further, with billions in investor losses tied to misstatements across sectors (financial services, energy, retail and so on), opting in gives institutions a path to recoup losses that would otherwise be written off. But, of course, we cannot lose sight of the developments in the law which, as noted, have driven much of the growth practitioners are seeing.
The central doctrinal battleground has been section 90A reliance. In 2024, the High Court (Allianz Funds Multi-Strategy Trust v Barclays Bank plc) struck out listed securities claims that depended on ‘passive’ investor theories, holding that active reliance must be shown and clarifying the ‘dishonest delay’ gateway for omissions claims. That decision materially raised the pleading and evidence bar for some claimant cohorts.
A subsequent High Court decision (Persons Identified in Schedule 1 v Standard Chartered plc) declined to impose a categorical restriction on passive investors proceeding under section 90A/schedule 10A, reopening questions about how certain investors may meet reliance – fact-sensitively and at later stages. That decision now progresses to the Court of Appeal, which should result in ‘reliance certainty’, both as to how to plead, as well as to define the breadth of claimant participants.
Another 2025 milestone has been the first detailed quantum judgment in the Autonomy litigation. That judgment puts structure around valuation, inflation, and confounding factor analysis in a UK securities context – sharpening expert approaches and settlement modelling. Investors now benefit from clearer valuation frameworks. It also helps inform book-building, portfolio loss calculations and trial budgets.
It goes without saying that providing a means for any victim to recover their losses from a wrongdoer is an important goal in itself, but when one considers the inequality of power between shareholders and global corporates, the importance of these developments comes into sharp focus.
In addition, as a result of broader governmental development and policy shifts, there has been a marked decline in enforcement by regulators, leaving a burgeoning gap. This provides an opportunity for institutional investors and trustees of public pension funds to fill this gap to level the playing field for market participants, seeking redress and recovering money, and protecting the value of their plan’s assets.
The securities litigation market has an important role to play. Developments in litigation funding and claims management, and an increasingly developed bank of judicial authorities, will help protect the market, improve governance and hold wrongdoers to account.
Leigh Callaway is a partner and dispute resolution lawyer at Fladgate
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