Investors suffering losses following a significant fall in a company's share price may have a claim for compensation under the Financial Services and Markets Act 2000 (FSMA). 

Sections 90 and 90A, together with Schedule 10A, of the Financial Services and Markets Act (FSMA) provide statutory routes for investors to recover losses caused by misleading statements, dishonest omissions, or dishonest delays in the publication of information by companies in the UK.

At Edwin Coe, we advise investors on these claims. This three-part series explains how the regime works, what investors need to establish, and the important differences between each route to recovery.

This is Part 2 of our Stock Drop series and covers s.90A FSMA. 

Other parts of the Stock Drop series are available here:

• Part 1: Section 90 FSMA: Misstatements or omissions in listing particulars.

Understanding Your Rights Under s.90A 

Once a company's shares are admitted to trading, investors continuously make decisions – to buy, hold, or sell – based on a stream of published information such as annual reports, half-year results, interim management statements, and regulatory announcements. 

If that information is false, misleading, or deliberately withheld, investors who have acted on it and suffered losses may have a claim for compensation under section 90A of FSMA and Schedule 10A. 

Unlike the listing particulars regime under s.90 FSMA, this framework is fraud-based. Liability requires proof of actual knowledge or dishonesty at board level.

Who is Liable?

An issuer is liable for a misstatement only where a person discharging managerial responsibilities (PDMR) within the issuer knew it was untrue or misleading, or was reckless as to whether it was. 

For omissions, a PDMR must have known of the omitted material fact and dishonestly failed to include it in the published information.

The Disclosure Obligation: UK MAR Article 17

Section 90A does not itself impose disclosure obligations. That duty arises separately under Article 17 of the UK Market Abuse Regulation (UK MAR).

UK MAR 17 requires issuers to announce inside information as soon as possible. Inside information is information of a precise nature, not yet public, which if disclosed would be likely to have a significant effect on the company's share price.

A failure to disclose inside information does not automatically create s.90A liability. For Schedule 10A to apply, the company's published information must also have been false, misleading, or the subject of a dishonest delay, and a PDMR must have had the requisite knowledge or dishonesty. 

PDMRs and the Knowledge Requirements

Because liability under Schedule 10A is anchored to the conduct of a PDMR – usually a director or senior executive with responsibility for the relevant information – identifying the right individual is critical. 

The High Court in ACL Netherlands BV v Lynch confirmed that for misstatement claims, a PDMR must have had the false facts present to their mind at the moment the statement was made, appreciating that it was untrue. General awareness of background circumstances is insufficient. 

For omission claims, the PDMR must have applied their mind to the omission at the time of publication and appreciated that a material fact was being concealed. Unless the PDMR knew there was a requirement to include the fact and knew it was not being included, there can be no liability. 

The Dishonesty Standard 

For omissions and delay claims, Schedule 10A applies a two-stage dishonesty test:

1. Objective limb: Conduct is dishonest only if it would be regarded as dishonest by honest market participants; and
2. Subjective limb: The person must also have been aware, or must be taken to have been aware, that persons who regularly trade in the market would consider it dishonest.

Cogent evidence is required, and courts recognise that even on the civil standard, fraud findings require evidence strong enough to overcome the general presumption that incompetence is more likely than dishonest design.

Delay

UK MAR requires prompt disclosure of inside information, but permits delay where: 

• immediate disclosure would prejudice legitimate interests;
• delay would not mislead the public, and 
• confidentiality can be maintained. 

Issuers must continually reassess these conditions, particularly where market rumours or press speculation arise. Rumours do not automatically create inside information, but if they do, and the issuer holds such information, delay may still be justified in limited cases.

The FCA emphasises that delay must not mislead the market. In fast-moving or unexpected situations, short delays may be acceptable to verify facts, consistent with the obligation to disclose “as soon as possible.”

Under s.90A and Schedule 10A FSMA, issuers face liability for dishonest delay. A claim arises where investors suffer loss due to delayed disclosure, but only if a PDMR acted dishonestly. Claimants need not prove reliance, although courts have clarified this regime cannot be used to bypass reliance requirements in misstatement or omission claims.

How Edwin Coe Can Help

If you have suffered losses as an investor in a listed company and believe it may have published false or misleading information, or withheld disclosure dishonestly, Edwin Coe can advise you on your claim.

These are among the most technically demanding claims in UK commercial litigation. Early, specialist advice is essential.

To discuss a potential claim, please contact Alexander Shirtcliff and Sam Harris in our Commercial Disputes team.