Legal fight looms over Hargreaves Lansdown’s role in Woodford fund
- RGL Management is edging closer to launching a group legal claim against HL
- The claim is against HL’s promotion of Woodford Equity Income ahead of its closure in June last year
- It believes investors who bought the fund were not fully informed of the risks
Litigation specialist RGL Management says it is edging closer to launching a group legal claim against Hargreaves Lansdown for its aggressive promotion of Woodford Equity Income ahead of the fund’s abrupt closure in June last year and its eventual winding up.
It believes investors who bought the fund on the basis of it being on the wealth manager’s list of best buys were not fully informed of the risks involved as manager Neil Woodford increasingly sought to make returns from illiquid holdings.
They are risks RGL believes Hargreaves Lansdown’s senior management were aware of, but did not convey to fund buyers.
HL is facing a legal claim for its aggressive promotion of Woodford Equity Income ahead of the fund’s abrupt closure in June last year and its eventual winding up
It was Woodford’s inability to meet a £238million redemption request from Kent County Council because of insufficient liquid holdings that triggered the suspension of dealings in the £3.8billion fund.
After seeking the views of an ’eminent’ QC from chambers One Essex Court, RGL believes there is a strong case for investors to claim against Hargreaves Lansdown for the losses they incurred as a result of the fund’s winding up – and also the ‘opportunity cost’ from missing out on alternative investment funds that would have generated positive returns.
On Friday, James Hayward, RGL chief executive, said the legal case was ‘strong’ and that all the required building blocks were fitting into place: the legal team (commercial law firm Wallace); litigation funding from a third party; and after-the-event insurance cover for litigation costs. He added: ‘The focus is now on increasing the size of the claim.’
Last year, RGL issued a High Court claim against bank Clydesdale for its selling of business loans with onerous terms that drove some companies into insolvency in the wake of the 2008 financial crisis. It also settled a very large claim against one of the world’s biggest banks.
RGL is not the only litigation specialist looking to issue claims against Hargreaves Lansdown for its role in the Woodford investment debacle. Both Leigh Day and Slater and Gordon are pursuing similar actions.
Last week, Leigh Day told Woodford investors it was ‘negotiating after-the-event insurance and litigation funding’. Hargreaves Lansdown did not comment.
Investors wishing to support RGL’s claim can register at rglmanagement.com/woodford- litigation.