Thousands more claimants join Woodford fund action

The law firm leading compensation claims against a top British investment platform has said it has thousands of people signed up to recover their losses.

London firm Wallace LLP has partnered with litigation claims management business RGL Management to assemble a group of retail investors in claims against Hargeaves Lansdown Asset Management Limited. The claims, also made against Link Fund Solutions Limited which was the fund’s authorised corporate director, are in relation to the losses investors claim to have suffered following the collapse of the LF Woodford Equity Income Fund in 2019. It has been estimated that the claim could be worth as much as £100m.

The fund was launched five years earlier by Neil Woodford but its performance dipped dramatically over the course of 2018 and into 2019 and investors began to redeem their shares at a faster rate. 

Link Fund Solutions determined that the fund could no longer meet redemption requests in an orderly manner and suspended the fund. Within a few months it had been wound up through the liquidation of its remaining portfolio.

Wallace said investors have suffered ‘substantial losses’ because the fund’s assets are now worth so much less than when they were bought. Investors may also have suffered other recoverable losses, it is submitted, for example the loss of opportunity to secure a better rate of return on their capital elsewhere had they not invested in WEIF.

At the point of suspension, it is estimated that 133,769 HL clients owned shares in the fund, worth more than £1bn.

Alexander Weinberg, litigation partner with Wallace, said HL has ‘obvious questions’ to answer as to why it failed to update its clients about the performance of the fund and why it continued to promote the fund when it under-performed.

He said: ‘HL continued to promote WEIF during that period despite the fact that WEIF’s performance relative to the FTSE all-share index declined sharply over 2017-2019. HL also appears to have known of certain liquidity and portfolio imbalance issues within the fund since at least November 2017 (and, it is to be inferred, potentially much earlier).’

Wallace said it has strong existing relationships with third party litigation financers and ATE insurers with experience of backing substantial group actions in the UK.

RGL Management states on its web page dedicated to the claims that the amount to be deducted from gross proceeds of successful claims will be 25% including VAT. This is less, the company says, than other law firms leading claims against Link.

The company added: ‘The legal team’s conclusions are very promising from the perspective of investors, with reference to claims against both Link Fund Solutions and Hargreaves Lansdown. Legal causes of action of real substantive merit are available that, if proven, would entitle investors to a reimbursement of losses suffered.’

A hearing is due for December to decide how the related claims – including thousands thought to be handled by Leigh Day and Harcus Parker respectively – will be managed.

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