SECURITIES LITIGATION IN THE UK: CURRENT LANDSCAPE AND RISK MITIGATION STRATEGIES
When investors believe they have suffered losses due to misleading corporate disclosures, the consequences for companies can extend far beyond market reactions. Whether triggered by a share price drop following a corrective announcement, allegedly false statements in a prospectus, failure to disclose material information, or misrepresentations about operations or risks, publicly listed companies increasingly face a significant threat: securities litigation.
Securities litigation encompasses legal claims brought by shareholders who allege they have suffered financial losses due to a company’s public statements or omissions. These claims can be devastating – with potential damages reaching into the billions, significant management distraction and lasting reputational damage that extends well beyond any financial settlement.
The consequences for individual directors can be equally serious. Directors may face personal liability, regulatory investigations, reputational harm and difficulty securing future board positions.
Securities litigation in the UK has been experiencing a notable increase in recent years, despite having been relatively uncommon compared to jurisdictions like the US. This shift can be attributed to several key developments: the rise of third party litigation funding, increased availability of group litigation orders, the growth of after the event insurance and heightened shareholder activism. These factors have created a more conducive environment for investors seeking redress for losses arising from misleading information or omissions in company disclosures.
For boards of UK-listed companies, understanding and proactively managing securities litigation risk has become an essential governance responsibility.
Jul-Sep 2025 issue
CMS Cameron McKenna Nabarro Olswang LLP