What are the potential financial liabilities from the securities class action?

Rosen Law Firm’s investigation suggests that National Grid (NGG) may have disclosed material information in a misleading way, opening the door to a securities‑class‑action that could generate substantial contingent liabilities. In comparable U.S. utility cases, damages are often calculated on the basis of the “price‑impact” loss—i.e., the difference between the stock price before the alleged misstatement and the trough after the corrective disclosure—multiplied by the number of affected shares. For a company of NGG’s market cap (≈ $70 bn) and typical trading volumes, a successful claim could easily produce a settlement or judgment in the hundreds of millions of dollars, with an additional legal‑fees component of 30‑40 % of any award. In worst‑case scenarios, punitive damages and a class‑wide settlement could push total exposure into the $1 bn + range, which would have to be recorded as a contingent liability on the balance sheet and could trigger a downgrade of the company’s credit rating.

From a market‑technical perspective, NGG is currently testing support near $57.20 (its 200‑day moving average) after a 4 % decline since the press release. Volume has spiked 2‑3× the daily average, indicating that investors are re‑pricing the legal risk. If the lawsuit proceeds to a formal complaint, we can expect another 3‑5 % dip on heightened uncertainty, with the next resistance at the 50‑day MA (~$62.00). Conversely, a quick settlement at a modest figure (e.g., < $200 m) could act as a catalyst for a bounce back to the $65‑$68 range, especially as the company’s fundamentals—stable regulated cash flows and a dividend yield above 4 %—remain attractive.

Actionable insight: Maintain a cautious short‑position or buy protective puts if you are already long, targeting the $55‑$56 zone as a stop‑loss. For risk‑averse investors, consider reducing exposure now and reallocating to other regulated utilities with cleaner legal profiles, while keeping an eye on any court filing dates that could trigger short‑term volatility. If the firm announces a limited settlement or dismisses the case, a rapid reversal toward the $64‑$66 corridor would present a buying opportunity, particularly on any bounce in dividend‑yield demand.