Litigation firm RGL Management is on the verge of launching a class action against Hargreaves Lansdown over claims it promoted the now defunct Woodford Equity Income fund (WEIF) while management was aware of the fund’s liquidity issues.
According to RGL’s website, the claim is centred on Hargreaves continuing to include WEIF in its Wealth 50 and, importantly, the level of knowledge the D2C platform’s senior management was privy to while doing so.
Trading in WEIF was suspended on 3 June last year after several stock-specific issues and heavy investor redemptions left the fund with a high proportion of illiquid holdings which it could not sell. The fund ceased trading in October last year and is currently being wound up.
A statement issued by RGL said the claim is for losses caused directly by the liquidation of the WEIF as well as for the loss of opportunity of alternative investments that would have generated positive returns.
Hargreaves knew of liquidity issues since November 2017
RGL has teamed up with commercial litigation solicitors Wallace LLP on the case. The two firms claim Hargreaves knew of liquidity issues in WEIF from November 2017 yet continued to offer the fund in its recommended funds list, the Wealth 50.
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“We have been looking at this claim since last year and are convinced that the legal merits of our proposed action are strong,” RGL chief executive James Hayward said.
RGL added it had sought the views of a QC from chambers One Essex Court and “counsel’s conclusions are very promising from the perspective of investors”.
Hayward added: “We’d encourage anyone who invested in the Woodford Equity Income Fund to register as soon as possible as we are moving at pace.”
Opportunity to replenish losses
Wallace LLP’s website confirmed it and RGL are in the process of assembling a group of retail investors with a view to obtaining compensation from Hargreaves.
Wallace partner Alexander Weinberg told Portfolio Adviser: “This legal action offers an opportunity for investors, who may be assessing their portfolios in these chastened Covid times, to replenish certain losses occasioned by Hargreaves Lansdown’s conduct.”
Separately, three other legal firms, Leigh Day, Slater and Gordon, and Nelsons, are also investigating whether there is a legal case to be made against Hargreaves over its cheerleading of Neil Woodford.
> See also: Second law firm looks into case against Hargreaves over Woodford
Hargreaves Lansdown declined to comment.
Last week, it was revealed that Hargreaves is scrapping its Wealth 50 list in favour of an independently governed list of funds.
