Federal Court Rejects Novel Effort to Expand English Securities Law

On July 29, 2026, in Merritt v. Barclays PLC,[1] the U.S. District Court for the Central District of California dismissed a putative securities fraud class action claim asserted under English law against S&C client Barclays on behalf of purchasers of Barclays ordinary shares traded on the London Stock Exchange. The decision is the first in the country to reject a novel attempt by the plaintiffs’ bar to litigate English law securities claims in the United States as a class action.

Understanding the significance of the decision requires some background about English securities law and the requirements for maintaining a class action in the United States. Under English securities law, misstatement claims require proof of reliance.[2] If each plaintiff must prove reliance, however, individualized issues would “predominate” over issues common to the class, which “preclude[s] certification” of a class in the United States.[3] The plaintiff in Merritt tried to evade the English law reliance requirement by recasting a misstatement claim as a “dishonest delay” claim, which does not require proof of reliance under English law. Specifically, plaintiff claimed that Barclays “dishonestly delayed” disclosing that its alleged misstatements were false.[4] The court rejected that theory because it would “render the misleading statements provision, and its reliance element, superfluous, contrary to basic principles of English statutory interpretation.”[5]

The court’s rejection of plaintiff’s novel argument has major significance for English issuers of securities. Because of substantive and procedural differences between U.S. and English law—including the U.S.’s opt-out class procedure and the absence of a loser-pays rule—if the court allowed the plaintiff to proceed in a U.S. court on a misstatement claim masquerading as a dishonest delay claim, that would create a powerful incentive for future claimants to bring English law securities claims in federal courts in the United States, rather than in England. At least one other plaintiff (represented by the same plaintiff’s firm) has tried to do the same thing.[6] The Merritt decision provides a powerful defense against these kinds of actions.