Rolls-Royce (RR) Shares Fell 3% on a £350M Potential Lawsuit

The Rolls-Royce Holdings PLC (LON: RR) share price fell 3% after a news story in the Sunday Telegraph indicated that the company could be facing a lawsuit from shareholders regarding the bribery and corruption scandal from 2017, which the firm settled with the UK’s Serious Fraud Office (SFO).

Rolls-Royce Holdings PLC, a renowned name in the aerospace industry, is potentially facing a significant legal hurdle, as recent reports suggest that shareholders are gearing up for a substantial class-action lawsuit with a staggering valuation of £350 million.

Armed with legal counsel, shareholders are diligently pursuing this lawsuit, alleging that Rolls-Royce, a prominent jet engine manufacturer, used deceptive practices by providing misleading information to the market concerning the corruption scandal.

Their pursuit of compensation appears to be motivated by a belief that the company did not act transparently and may have misled investors.

The recent report by The Telegraph on October 21, 2023, has added fuel to this legal fire. According to this reputable source, Rolls-Royce has opted to enlist the legal services of Slaughter & May, the same law firm it relied on during the original corruption scandal. 

This strategic move signifies the company's intent to prevent potential litigation and navigate these treacherous legal waters with a familiar ally.

To better understand the roots of this looming legal battle, we must revisit the scandal that triggered it all. In January 2017, Rolls-Royce made a startling revelation, announcing that it would be compelled to pay a substantial sum of £671.0 million in connection with bribery and corruption charges that had surfaced in various overseas markets.

These allegations cast a dark shadow on the company's integrity, putting its reputation and financial stability on the line. The gravity of the situation was evident when Rolls-Royce entered into a deferred prosecution agreement with the UK Serious Fraud Office. 

The agreement with the Serious Fraud Office marked a significant step in acknowledging and addressing the wrongdoings, although it did not shield the company from the repercussions that might follow.

Furthermore, Rolls-Royce was entangled in a web of legal agreements with international authorities. It entered into a deferred prosecution agreement with the US Department of Justice, illustrating the global scale of the corruption allegations. 

Rolls Royce (RR) share price. 

The Rolls Royce share price fell 3.04% to trade at 192.43p, from Friday’s closing price of 198.47p.