A rise in third-party funding has led to more shareholder lawsuits involving FTSE companies. Over the past year, firms like Entain, British American Tobacco (BAT), and Boohoo have faced legal actions from institutional investors. This trend is driven by law firms starting group claims in the High Court to take advantage of allegations of wrongdoing.
Key Details
Aymen Mahmoud, managing partner at McDermott, said that London’s capital markets and litigation system have created a good environment for these cases. He noted, "The direction of travel in securities litigation is increasingly clear." The focus on high-value cases has become a key priority for dispute resolution departments.
Entain is the latest company to be targeted. Legal proceedings were filed by Morgan, Lewis & Bockius on behalf of a group of investors. This lawsuit relates to Entain's deferred prosecution agreement with the Crown Prosecution Service. The company agreed to pay a £585 million penalty for past bribery and corruption in Turkey. However, the trial is not expected to start until 2029, pending the outcome of related criminal trials involving former executives.
Background
Meanwhile, BAT is also facing group lawsuits in the High Court over alleged breaches of North Korean sanctions. Shareholders claim the company did not disclose violations of U.S. sanctions linked to its past operations in the region.
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The rise in litigation could affect investor sentiment towards FTSE companies, especially those involved in legal disputes. Increased scrutiny and possible penalties may lead to higher stock price volatility for affected firms. Investors will watch for updates on these lawsuits and their impact on corporate governance practices.
Based on reporting by: cityam.com