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Rival firm files group action claim on behalf of trapped Woodford investors

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17/10/2022
RGL Group has filed a group action claim against an investment platform and a management firm on behalf of thousands of investors in the defunct Woodford Equity Income fund.

RGL group is now the third firm making a claim on behalf of investors who lost their savings deposited in the Woodford Equity Income fund (WEIF).

The claim, issued in the High Court, is against Hargreaves Lansdown Asset Management and Link Fund Solutions.

Its claim relates to “investor losses sustained as a result of the conduct of Hargreaves Lansdown and Link in relation to the collapse of the WEIF”.

Investors are also claiming damages “for the loss of opportunity they suffered by missing out on alternative investments, that, in contrast to the WEIF, would have generated positive returns”.

RGL Group is acting on behalf of 3,200 investors though it said numbers “continue to grow daily” and expects more to join over the coming months.

It said investors who join the claim stand to receive “the most competitive rates of return” compared to rival firms as it charges 25% including VAT from claimants if it wins the case. It said the claim is expected to be in excess of £100m for investors.

Meanwhile Harcus Parker and Leigh Day who joined forces to bring a claim against Link Fund Solutions charge 42% and 30% respectively on a no-win, no-fee basis.

Three years on from the Woodford fallout

Three years ago, the flagship Woodford Equity Income fund, run by former star manager Neil Woodford, was suspended as it couldn’t meet a surge in redemption requests following a period of poor performance.

The suspension of the £3bn fund was originally due to be lifted and the fund re-opened in December 2019. But in October 2019, the fund’s administrators confirmed the fund would be wound up with cash returned to customers “as soon as possible”.

Payments from the sale of assets from the renamed LF Equity Income fund started in January 2020 and so far, £2.56bn has been repaid. It is believed that over 300,000 investors have been left stranded in the WEIF.

Link Fund Solutions, the fund’s administrator already faces a £306m penalty over its “failings in managing the liquidity” of the fund, as well as a further £50m hit. Investors have been warned they may need to wait until 2023 to get their money back.

Harcus Parker and Leigh Day filed a joint application in June 2022 at the High Court for a Group Litigation Order (GLO) against LFS which detailed claimants’ allegations against the administrator.

It is expected that the application will be heard in the High Court in December 2022.

By contrast, RGL Group’s claim is against both Hargreaves Lansdown, and LFS.

It said the investment platform, “continued to recommend the WEIF to its clients right up to the day of the fund’s collapse, despite being aware of longstanding portfolio diversification and liquidity issues”.

On Link, it said: “Link was the Authorised Corporate Director (ACD) of the WEIF. As such, it had a legal obligation to ensure the fund operated in accordance with how it was promoted and sold to investors, as well as ensuring the ongoing liquidity and diversity of the fund. The claim against Link relates to its failure to appropriately administer and manage the WEIF”.

RGL has instructed Wallace LLP, a specialist commercial law firm based in central London, led by Alexander Weinberg, Partner, to act on behalf of RGL Group claimants, with Alain Choo-Choy KC of One Essex Court Chambers appointed as leading counsel.

Route to secure redress

James Hayward, CEO, RGL Management, said: We are pleased to be filing this first tranche of claims today providing a route for those affected to secure redress from both Link Fund Solutions and Hargreaves Lansdown, whose respective unlawful conduct resulted in significant losses for WEIF investors.

Pursuing both defendants is at no additional cost to our claimants. When combined with the fact that RGL Group’s action has the lowest amount to be deducted on success of any group on the market, our claimants have the best chance of a full or greater recovery of losses of any WEIF investor claimants. They will be part of an action claiming against both defendants with additional causes of action.” 

Alexander Weinberg, partner, Wallace LLP, said: This group action has a critical role in providing a route for WEIF investors to secure redress from Link Fund Solutions and Hargreaves Lansdown. Both institutions have failed WEIF investors, albeit in different ways, and each has a compelling case to answer.

The RGL Group is resolute that both Hargreaves Lansdown and Link should be held accountable for their respective failings. The claim against both defendants will be pursued vigorously to that end.”

Hargreaves Lansdown and Link declined to comment.

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