Hargreaves Lansdown (LON:HRGV), the wealth platform that handles $122bn in assets under management, is facing a multimillion-pound lawsuit for promoting Woodford Equity Income (WEIF), the failed fund of one-time star manager Neil Woodford.
Hargreaves Lansdown is accused of promoting WEIF up to the fund’s collapse in October 2019, despite allegedly knowing about liquidity and portfolio imbalance issues as far back as 2017.
The fund’s corporate director Link Fund Solutions (LFS) is also in the crosshairs of the legal action.
Neil Woodford launched the Woodford Equity Income Fund (WEIF) in 2014. It ultimately collapsed five years later – Photo: Alamy
LFS has already faced class-action claims from some of the 300,000 investors impacted by the fund’s collapse, but this marks the first time that Hargreaves Lansdown is implicated.
RGL Management, a specialist in actions against financial institutions, is prosecuting the case with advice from law firm Wallace LLP.
"Both institutions have failed WEIF investors," said Wallace LLP partner Alexander Weinberg.
Investors claim that WEIF was being irresponsibly stacked with highly volatile companies – some unquoted – in place of safer FTSE 100 options.
The fund was subsequently unable to meet redemptions and was suspended so that investors were unable to redeem their shares.
Hargreaves Lansdown begins hunt for next CEO
Today also brought the news that Hargreaves' chief executive officer Chris Hill will step down after five years in the role.
Chair Deanna Oppenheimer said: “Having started the implementation of the next phase of the company's growth, Chris has decided it is time to pass the reins to a new CEO to continue to execute on this strategy and build on our market-leading proposition.
“The board is grateful to Chris for his leadership and looks forward to continuing to work with him on delivering the strategy and a successful handover next year."
Commenting on his time as head of the company, Hill said: "I set in train a comprehensive strategy to ensure the company remains at the forefront of wealth management, including providing clients with the best digital tools.
“Having put in place strong foundations that are already delivering results, including an exceptional leadership team, it will be time after a thoughtful transition to hand over to my successor to take the company through the next phase of embedding this strategy."
Handover is scheduled for November 2023; the board will undertake a search for Hill's successor in the meantime.
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