The Scottish Mail on Sunday

1,000 rea­sons Woodford may be head­ing for judg­ment day...IN COURT

- By Jeff Pre­stridge Investing · Business · Hargreaves Lansdown · West Yorkshire · United Kingdom · High Wycombe · Wycombe Wanderers F.C. · Buckinghamshire · Wales · Braintree · BlackRock · Black Rock · PJT Partners · Invesco Perpetual · Leeds · Conwy

ALTHOUGH dis­graced fund man­ager Neil Woodford may have dis­ap­peared from view – pre­sum­ably to count the £8.7mil­lion of fees he pur­loined af­ter con­tro­ver­sially sus­pend­ing his flag­ship Eq­uity In­come fund in June – in­vestors caught up in the scan­dal refuse to lie down qui­etly. They want fi­nan­cial jus­tice, and in par­tic­u­lar those re­spon­si­ble for hyp­ing the Woodford brand – fund plat­form Har­g­reaves Lans­down – to be held to ac­count.

Over the past 14 days, hun­dreds of read­ers – all Woodford vic­tims – have con­tacted The Mail on Sun­day, con­firm­ing they in­tend to sup­port a pos­si­ble group ac­tion against Har­g­reaves Lans­down, be­ing or­gan­ised by law firm Leigh Day.

If the ac­tion goes ahead, it would be based on Har­g­reaves Lans­down’s fail­ure to alert its cus­tomers to the in­creas­ingly illiq­uid na­ture of Eq­uity In­come’s in­vest­ments which cul­mi­nated in the fund’s sud­den and un­ex­pected clo­sure in June. This ‘fail­ure’ was com­pounded by the fact that the fund plat­form re­lent­lessly pushed Eq­uity In­come and sis­ter Woodford fund In­come Fo­cus – also cur­rently sus­pended – as ‘best buys’ right up un­til June.

On Fri­day, Leigh Day said some 1,000 Eq­uity In­come in­vestors, who bought the fund through Har­g­reaves Lans­down, had con­tacted the com­pany ex­press­ing an in­ter­est in join­ing a pos­si­ble group ac­tion.

So­lic­i­tor Kam Vo­j­dani said the firm was still ‘in­ves­ti­gat­ing’ the fea­si­bil­ity of any le­gal ac­tion. He added: ‘We are tak­ing ev­i­dence to es­tab­lish whether there is a dis­crep­ancy be­tween what Har­g­reaves Lans­down was say­ing to cus­tomers and what was hap­pen­ing in re­al­ity. In a nut­shell, why did the plat­form ap­pear to be say­ing pos­i­tive things about Woodford Eq­uity In­come, but lit­tle that seemed to be neg­a­tive un­til it was too late? We are try­ing to un­der­stand why the plat­form pre­sented Woodford in­for­ma­tion in such a favourable way.’

He con­firmed a de­ci­sion on whether to pro­ceed would be made in the next cou­ple of weeks. If a group ac­tion is launched, it would likely be set up on a ‘no fee no win’ ba­sis with Leigh Day earn­ing its fees from any pay­out won. Any ac­tion may take more than two years to reach a res­o­lu­tion. Also, Vod­jani did not rule out the group ac­tion em­brac­ing other ‘de­fen­dants’ – such as Woodford him­self and Link Fund So­lu­tions (the firm that over­saw man­age­ment of the Eq­uity In­come fund). Har­g­reaves Lans­down re­fused to com­ment on the pos­si­bil­ity of a group le­gal ac­tion be­ing launched against it.

John Tebbey is among those who have al­ready con­tacted Leigh Day to reg­is­ter in­ter­est in sup­port­ing a group ac­tion. Be­tween them, John and his wife Sharynn, from Brain­tree, Es­sex, in­vested some £20,000 in Woodford Eq­uity In­come via Har­g­reaves Lans­down.

John, 75, a for­mer IT sales­man, says they are ‘ter­ri­fied’ of los­ing their money. He adds: ‘We ap­pre­ci­ate that stock mar­kets in­volve risk, but never did we be­lieve that Eq­uity In­come would ef­fec­tively go into liq­ui­da­tion.’ The £3bil­lion fund is cur­rently be­ing dis­man­tled by in­vest­ment man­agers Black Rock and PJT Part­ners, with in­vestors such as the Tebbeys likely to start get­ting back some of their cap­i­tal from early next year.

John says: ‘We feel to­tally let down by Har­g­reaves Lans­down. It ac­tively en­cour­aged us to stick with Woodford on the ba­sis he had al­ways man­aged to bounce back from pe­ri­ods of poor per­for­mance’ [he did this in the early 2000s while man­ag­ing money for In­vesco Per­pet­ual].

‘This en­cour­age­ment con­tin­ued un­til the fund’s sus­pen­sion. By then it was too late to do any­thing. Yes, our £20,000 in­vest­ment may not be huge by some stan­dards, but to us the losses we are go­ing to crys­tallise are life chang­ing – losses we will find im­pos­si­ble to re­cover, given we are both in our seven­ties.’

As for Woodford, John is damming. ‘We have to­tal con­tempt for him. He dragged us into this fi­nan­cial dis­as­ter and then con­tin­ued to make money from it – £8.7mil­lion of fees sucked from Eq­uity In­come af­ter it was sus­pended. How can this be right?’

Ter­ence Whitaker, from Leeds, West York­shire, has also con­tacted Leigh Day. Ter­ence, a 67-year-old re­tired car­pet es­ti­ma­tor, in­vested £13,000 in Eq­uity In­come via Har­g­reaves Lans­down. He says: ‘I in­vested in Woodford when he was run­ning funds for In­vesco Per­pet­ual in the 1990s and 2000s. He made me a few quid. So when he launched Woodford Eq­uity In­come, I had no prob­lem in back­ing him.’

He adds: ‘What an­noys me is that at no stage did Har­g­reaves Lans­down alert me to the fact that Eq­uity In­come’s port­fo­lio was no longer liv­ing up to the fund’s ti­tle and in­vest­ing in div­i­dend-fo­cused UK com­pa­nies. In­stead, it was heav­ily in­vested in illiq­uid, of­ten un­quoted, stocks. If I had known this, I would have got out. Yet Har­g­reaves Lans­down seemed more in­ter­ested in sell­ing more and more of Woodford.’ Ter­ence is now in the process of trans­fer­ring his in­vest­ments with Har­g­reaves Lans­down to ri­val plat­form AJ Bell.

Steve Bowden, a 65-year-old re­tired swim­ming pool en­gi­neer from near High Wy­combe in Buck­ing­hamshire, is an­other Woodford in­vestor signed up to the Leigh Day group ac­tion. He says: ‘If at any time Har­g­reaves Lans­down had re­moved Woodford from its best buy list, I would have sold my hold­ings. I now have no idea what my in­vest­ments are worth and when I am likely to get any of my money back.’

Mike and Ann Con­nell have yet to make their minds up about sup­port­ing any le­gal ac­tion against Har­g­reaves Lans­down. But their re­tire­ment plans have been blown off sched­ule as a re­sult of the £50,000 in­vest­ment they have tied up in Eq­uity In­come via the plat­form.

Ear­lier this year, with Mike, 65, and look­ing to re­tire from work as a con­sul­tant in the hos­pi­tal­ity trade, they bought a new house in Conwy, North Wales. But just as they signed on the dot­ted line, they learnt their money in Eq­uity In­come was locked in be­cause of the fund’s sus­pen­sion. Although they went ahead with the house pur­chase, Mike says the Woodford de­ba­cle has had a ‘ter­ri­ble’ im­pact on their re­tire­ment fi­nances.

On Fri­day, he said: ‘We are just a nor­mal cou­ple, not ma­jor in­vestors, look­ing to en­joy the lat­ter years of our lives af­ter work­ing hard since we were teenagers. We’ll sur­vive this in­vest­ment scan­dal but it’s so dis­tress­ing. Hope­fully, le­gal claims will be suc­cess­ful against both Har­g­reaves Lans­down and Woodford. And yes, he should be made to re­pay the £8.7mil­lion of fees that he has taken since Eq­uity In­come was closed.’ Ab­so­lutely.

 ??  ?? AC­CUSED: Lawyers could be close to launch­ing a group against the dis­graced fund man­ager Neil Woodford on be­half of 1,000 in­vestors who have lost out
AC­CUSED: Lawyers could be close to launch­ing a group against the dis­graced fund man­ager Neil Woodford on be­half of 1,000 in­vestors who have lost out
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