Investors of Neil Woodford File Lawsuits Against Hargreaves Lansdown
Hear Ye, Hear Ye: Neil Woodford's UK Equity Fund debacle continues to make headlines as investors take legal action against Hargreaves Lansdown.
What a rollercoaster ride it's been since the much-celebrated portfolio manager's flagship fund was halted by the regulator in 2019. Now, more than 5,000 of those who invested in the now-defunct equity income product are suing the investment platform, claiming it carried on promoting the fund even when aware of problems.
A group High Court claim against Hargreaves Lansdown, a hefty £5.4bn investment platform set for sale to private equity investors, has nearly doubled over the past two years. RGL Management, the claims company, accuses the platform of continued promotion of the fund despite recognizing its long-standing portfolio diversification and liquidity issues.
Hargreaves Lansdown holds a significant position in the retail investment market. When their research team favored a fund, investors followed suit, and Woodford's was no exception. The interest of this DIY investment behemoth mattered; their backing sealed investors' faith.
Yet, when the Woodford fund crumbled, a storm ensued. Last year, investors trapped in the flagship fund received up to £235 million in compensation as a result of an investigation by regulators. The Financial Conduct Authority ruled that Link Fund Solutions, the administrator for the fund, made "critical errors and mistakes," leading to cash shortages when redemption requests soared.
As for Woodford himself, it's been said his fund was like a spicy curry, labeled a korma but containing hidden heat. Mackay, founder of Boring Money, likened Woodford's fund to a vindaloo that looked calm on the surface but contained hidden issues.
Even though Link's proposed scheme of arrangement is approved by the court, RGL's claims can still be taken against Hargreaves Lansdown. To join the High Court claim, investors need only register on RGL's website. However, beware, the claims management company stands to make a 25% deduction from the gross proceeds.
Sources:[1] ShareSoc Endorses Woodford Claim Against Hargreaves Lansdown - ShareSoc (2023, March 9). https://www.sharesoc.org/blog/entry/sharesoc-endorses-woodford-claim-against-hargreaves-lansdown
Despite the legal action against Hargreaves Lansdown, investors are still curious about potential opportunities in finance and business. In light of the Woodford debacle, some investors might be cautious about investing in certain funds, preferring to focus on research and understanding the risks involved.
