It’d be interesting to know what, if any, further litigation is planned in relation to this particular case.

Although I agree to a certain extent that this decision complicates the status of ordinary creditors in an insolvent company, by the same token it’s important to remember that the element of ‘misleading and deceptive conduct’ remains at the heart of the decision. The judgment doesn’t mean that in respect of every company that goes insolvent, anyone who has recently bought shares will be able to launch a successful claim.

When you look at it carefully, it is apparent that if the directors had fully complied with their quite plain duties (i.e. to disclose certain information) then there would have been no claim. This should not produce too much uncertainty for companies who are committed to fully complying with the law.

Additionally, in a practical sense how does one differentiate between the risk taken by a shareholder who makes a decision assuming they have true and complete information about the company, and an creditor? Both surely have certain expectations about the company and take a calculated risk that they will recoup their investment.

However I totally agree that the appropriate remedy should be against the directors - an interesting (and obviously untested at the moment) question is whether, in fact, the company in administration now has a cause of action against its directors in personam. Surely the answer is yes?

The other thing I was thinking is: what if Magaretic had bought his shares 11 weeks rather than 11 days before SOG went into administration? Or 11 months? How would that change his claim? When precisely should directors place their company in voluntary administration?

Applying consumer legislation to the share market makes no sense. Consumer protection laws are premised upon the imbalance of knowledge between supplier and consumer, and facilitates confidence in a retail environment. The share market is premised entirely differently: it runs on the basis of the free flow of information. Indeed, some have argued that even insider trading laws aren’t justified on an economic basis.

Anyone who’s had anything to do with shares (or just listened to Sat morning radio) knows that it’s a fairly clear risk-return equation, but you need to do your homework. The tragedy of the situation is that ordinary people who invest in shares don’t have the same access to expertise and knowledge as institutional investors. As a result, bad decisions are made. So perhaps this is a problem of the “share consumer” - the encouragement of so-called Mums and Dads investors, who compete in a market where massive super funds and others have vastly more resources and information at their disposal.

Buyer beware…