The new Section 90A of the Financial Services and Markets
Act (FSMA), introduced by the Companies Act 2006 as part of
implementing the Transparency Directive, marks a paradigm
shift. For the first time, an investor has a statutory cause of
action against the issuer for loss caused by a purchase based
on a false or misleading statement in a periodic report by the
issuer (as opposed to in a prospectus). The framework of
Section 90A is not dissimilar to that of Section 10(b) of the
Securities Exchange Act 1934, which has spawned much securities
litigation in the US. Section 90A opens the way for US-style
stock-drop claims to be brought in the UK.
While there is not yet any reported litigation under Section
90A, the new issuer liability regime may assume greater
importance as the credit crunch continues to unfold.
Due to the transitional arrangements, it will apply to