Allianz Funds Multi-Strategy Trust & Ors v Barclays Plc

The court considered applications by Barclays to strike out or obtain reverse summary judgment in respect of 241 claims pleaded under Schedule 10A, paragraph 3 and to dismiss claims for dishonest delay under Schedule 10A, paragraph 5 of the Financial Services and Markets Act 2000 (as amended). The judge held that the requirement of "reliance" in paragraph 3 incorporates the settled common law test of inducement from the tort of deceit: a claimant must have the relevant published information (or its gist via a third party) read or communicated to it and that information must have influenced the decision to acquire, hold or dispose of securities.

Applying that test the court concluded that the Category C claimant funds (Price/Market Reliance) did not allege that decision‑makers or advisers had read or considered the pleaded published information and therefore had no real prospect of proving reliance; the court granted reverse summary judgment/struck out those 241 Category C claims. The court also held that paragraph 5 applies only in relation to information which has been published (or the availability of which has been announced) and dismissed the pleaded claims for dishonest delay where no applicable publication was pleaded.

This was a first instance application in which the defendant bank sought strike out and reverse summary judgment in respect of multiple claims under Schedule 10A of FSMA for losses said to arise from untrue or misleading published information, omissions from published information and dishonest delay in publication.

Background and nature of the applications

• The Claimants are institutional investors and funds who allege that Barclays operated a dark pool trading system ("LX") in a way that was misrepresented or omitted from the bank's published information, and that those misstatements, omissions or dishonest delay inflated the share price over the Relevant Period (1 January 2011 to 1 February 2016).
• The Bank applied (Strike Out Application dated 28 March 2024) to strike out 241 claims under Schedule 10A paragraph 3 and/or for summary judgment under CPR Part 24 on the basis they disclosed no reasonable cause of action or had no real prospect of success. The Bank also opposed the Claimants' application to amend particular parts of their pleadings concerning paragraph 5 (dishonest delay), which the court considered together with the Strike Out Application.

Issues before the court

• The statutory meaning and content of the term "reliance" in Schedule 10A paragraph 3 and paragraph 3(4): whether Parliament intended to import the common law test of reliance/inducement from deceit or to adopt a different or wider test (for example by allowing price/market reliance without proof of awareness of the published information).
• Whether liability for dishonest delay under paragraph 5 requires that the information was subsequently published or announced so that there is a publication to which the concept of delay can attach.
• Whether, on the pleadings and the evidence available at this stage (including reliance questionnaires and Hogan 5), the Category C claims (price/market reliance) have a real prospect of success.

Court's reasoning and findings

• The judge examined the legislative history (including the Davies Review and the Treasury consultation) and concluded that Parliament intended "reliance" in Schedule 10A to be a real, substantive requirement. That requirement should be understood in terms of the common law test of inducement: the claimant must have been aware of, and influenced by, the published information (or its gist communicated via a third party) when taking the decision complained of. The judge treated the presumption of inducement as an evidential inference of fact rather than a legal fiction.
• The court held that the Schedule 10A reliance requirement applies equally to claims based on alleged omissions, but that claimants need not prove reliance on the absence of information; rather they must show reliance on the published information itself (or its communicated gist), and causation then addresses whether the omitted matters would have made a difference.
• The judge accepted that secondary sources may transmit published information but emphasised that claimants must show they or their decision‑makers/agents received and relied upon the relevant published information (or its gist).
• On paragraph 5 (dishonest delay) the judge concluded that the statutory wording and context require that liability for delay pertains to information that has been published or the availability of which has been announced (i.e. paragraph 2 scope), so paragraph 5 does not create a remedy where no publication or announcement is pleaded.
• Applying the law to the evidence, the court found that the 241 Category C funds did not allege that any decision‑maker or adviser had read or considered the pleaded published documents and that the sample reliance questionnaires supported that position; accordingly those claims had no real prospect of success and were struck out / reverse summary judgment was granted. The court also concluded that the pleaded dishonest delay claims under paragraph 5 disclosed no reasonable cause of action on the existing pleadings because the necessary publication was not pleaded.

Procedural and case management outcome

• The judge granted the Strike Out Application in part: strike out/reverse summary judgment in respect of the 241 Category C claims and dismissal of the paragraph 5 dishonest delay claims on the pleaded basis. The court invited parties to agree a form of order and listed further case management steps (CMC3) and preserved time for any appeal application.

The court allowed the defendant's application in part. It granted reverse summary judgment / struck out the 241 Category C (Price/Market Reliance) claims under Schedule 10A paragraph 3 because those claimants had no real prospect of proving the required reliance (they did not allege that decision‑makers or advisers read or received the pleaded published information or its gist). The court also found that the Particulars of Claim disclosed no reasonable cause of action for dishonest delay under Schedule 10A paragraph 5 because paragraph 5 applies only where the information in question has been published or its availability announced, and the pleaded case did not allege such publication.