High Court Refuses Tesco's Strike Out Application In S.90A FSMA Group Shareholder Action

In an important decision for securities litigation in the UK, the High Court has dismissed a strike out application made by Tesco plc in the group litigation brought by its shareholders under section 90A Financial Services and Markets Act 2000 ("FSMA"), relating to the false and misleading statements made by Tesco regarding its commercial income and trading profits in 2014: SL Claimants v Tesco plc [2019] EWHC 2858 (Ch).

In summary, Tesco asserted that it was not liable for any untrue or misleading statement in its published information under section 90A and schedule 10A FSMA to any claimants who held the shares in a custody chain with more than one intermediary. While Tesco accepted that its construction would render the FSMA regime ineffective in relation to claims by holders of intermediated securities, it contended that these consequences flowed from a failure of the law to keep pace with the development of a dematerialised market, where transfers in certified