Investment platform Hargreaves Lansdown is said to be facing legal action following the collapse of Woodford Equity Income.
RGL Management, a litigation specialist, has sent letters before action to Hargreaves Lansdown Asset Management and to Link Fund Solutions, the corporate director of fund.
RGL is taking the action on behalf of investors who allege the loss of thousands of pounds either by investing directly in Woodford Equity Income, or by missing out on the opportunity to invest elsewhere. The Times reported that Hargreaves Lansdown clients had a total £1.6bn exposure to the fund.
Hargreaves Lansdown kept the £3.7bn Woodford Equity Income on its ‘Best Buy’ list right up until the fund was suspended in June 2019. However, analysts – including those working for Hargreaves Lansdown – had starting flagging concerns about the illiquidity of stocks held by the fund several months earlier.
FT Advisor said 2,000 investors had joined the legal action, with RGL expecting the total value of the claim to be in excess of £100m.
Link, meanwhile, is being sued for its alleged failure to appropriately administer and manage the fund.
Neil Woodford, then one of the city’s most famed stock pickers, stopped investors from being pulling out of from his flagship fund in June 2019 after being overwhelmed with a surge in redemption requests. Woodford was subsequently sacked from the fund in October 2019, when it was also announced the fund would be liquidated.
Around £20om remains trapped within the fund, The Times reported, and Link has indicated to investors they may not receive more than the £2.3bn that has already been returned.
The Financial Conduct Authority is continuing to invest the fund’s collapse.
Hargreaves Lansdown declined to comment.
Stuart Duncan, analyst at Peel Hunt, said: “Inevitably, we expect this will take some time to resolve.
“The news [of pending legal action] is likely to be a small negative for some time, although there have been rumours of such action for a while.” Peel Hunt has a ‘buy’ rating on Hargreaves Lansdown.
As at 1045 GMT, shares in Hargreaves Lansdown were off nearly 2% at 1,531.5p.