Woodford Campaign

Update 25th November 2024

Click here to read Update 17 in full.

ShareSoc Endorses the RGL Woodford Group Litigation against Hargreaves Lansdown

This update examines the RGL Woodford Group Litigation and sets out the reasons for ShareSoc’s endorsement.

ShareSoc believes that the potential benefits of the RGL Woodford Group Litigation against Hargreaves Lansdown outweigh the identified risks for the vast majority of claimants, and that it is in the interest of affected investors to participate. On this basis, ShareSoc has chosen to endorse the claim.

The Campaign

ShareSoc invites everyone concerned about Woodford investments, particularly investors in the LF Woodford Equity Income Fund (WEIF), the LF Woodford Income Focus Fund (WIFF), Woodford Patient Capital Trust plc (WPCT) and Hargreaves Lansdown Multi-Manager Funds (MMF), to join the ShareSoc Woodford Campaign.

Many individual investors lost money as a result of the dramatic loss in the value of assets within investment vehicles managed by Woodford Investment Management Limited, as a result of the apparent failure of both the manager and authorised corporate director to adhere to regulatory restrictions, and also as a result of the resulting fund suspension in 2019 and subsequent liquidation.

ShareSoc is keen to identify recourse routes open to affected investors, to ensure that the events which harmed individual investors are properly examined, and to press for changes in regulations and regulatory enforcement that will improve standards and accountability.

Multiple legal initiatives surfaced to investigate the matter and to seek redress for investors. Only one of these initiatives (RGL) now remains open to new claimants.

We encourage affected investors to join the Woodford Campaign (click here). Campaign members receive updates from ShareSoc, and can participate in the campaign forum to exchange views with other investors. Membership of the campaign is not restricted to Woodford investors. 

Further details about our campaign are in the sections below:

 

Objectives

Our campaign objectives are:

  1. to facilitate communication between Woodford investors
  2. to help affected Woodford investors recover their losses where possible
  3. to hold to account those who contributed to those losses through action or inaction
  4. to bring about changes in regulation and regulatory enforcement to ensure this type of scandal doesn’t happen again

Our primary aim is to provide information and facilitate communication to assist investors in gaining compensation for losses suffered, where we believe there is a reasonable opportunity for them to do so.

ShareSoc also believes that the actions and inactions of those involved in the scandal should be properly examined and that there should be clear consequences for any failure to exercise proper care in the management and administration of individual investors’ money.

The Woodford scandal also raises questions about consumer education and about the structure of funds holding less liquid assets, how they are marketed, and the roles and responsibilities of the various parties involved.

ShareSoc will continue to campaign to change the regulations and/or the way the regulator enforces the regulations, to ensure this type of scandal does not happen again.

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Latest Updates

 

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A Note of Caution

Nothing in this campaign (including any endorsement of specific third-party initiatives) constitutes an accusation or assumption of guilt on the part of any person or persons. ShareSoc is not a party to any legal action.

Subsequent to (and independent of) our decision to endorse the Leigh Day claim, ShareSoc entered into a cooperation agreement with Leigh Day under which ShareSoc provided certain campaign-related services in return for which it received a monthly stipend.

There is no financial arrangement between ShareSoc and RGL.

Investors must review the information available and reach their own decisions with regard to any course of action.

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The RGL Woodford Group Litigation

The RGL Woodford Group’s legal team has commenced proceedings against Hargreaves Lansdown, alleging that HL continued to recommend the Woodford Equity Income Fund (WEIF) despite apparently being aware of its liquidity issues from November 2017.  

The claim is open to investors who held the fund through the HL platform. The Group currently comprises over 5,000 claimants. 

Further information is available on the RGL Woodford Group Litigation website. 

ShareSoc Endorsement of the RGL Woodford Group Litigation

ShareSoc believes that the potential benefits of the RGL Woodford Group Litigation against Hargreaves Lansdown outweigh the identified risks for the vast majority of claimants, and that it is in the interest of affected investors to participate. On this basis, ShareSoc has chosen to endorse the claim.  

Following settlement of claims against Link Fund Solutions Limited via a Scheme of Arrangement, the RGL Woodford Group Litigation is now the only remaining WEIF-related group legal claim. ShareSoc considers it unlikely that further claimant groups will emerge.

The alternative of making a claim via the Financial Ombudsman Service is potentially still available to investors at this stage, but complaints need to be made within 6 years of the relevant event, or within 3 years of becoming aware (See note on FOS claims below).

The claim is structured on a “no-win-no-fee” basis. This means that all litigation costs are covered by a litigation funder, to be reimbursed out of any eventual recovery. Should the case be successful, the claimants will receive 75% of any recovery with the remainder being shared between the various other participants.

Should the case be unsuccessful, an After-The-Event (ATE) insurance policy is in place and is intended to protect claimants in the event of any adverse cost decision against them. We are informed by RGL that the policy includes an anti-avoidance endorsement, which commits the insurer to settle all claims (except fraudulent claims). Although there can be no absolute guarantee that the amount of cover will be sufficient, or that the insurer will pay a claim, RGL has taken steps to minimise this risk.

The process of becoming part of the RGL Woodford Group involves prospective claimants signing a Litigation Management Agreement (LMA), authorising RGL to arrange litigation funding and insurance against adverse costs, to appoint solicitors and counsel, and to manage the proceedings on their behalf. Claimants will also need to fill out a questionnaire regarding their transactions in WEIF. As with any court proceeding of this nature, the process could take two to three years to get to trial.

RGL has informed us that it has raised sufficient finance to cover the expected cost of a court case, and has sourced insurance cover which will be maintained at an appropriate level. As is usual at this stage in the proceedings, the identities of the funder and insurer have not yet been disclosed.

RGL acts as claims manager. Wallace LLP is the solicitor, and Alain Choo Choy KC is leading counsel. Any decisions relating to settlement or discontinuation will be taken by a Committee (to be appointed as required), and changes to the LMA can only be made on the instruction of a Costs KC (to be appointed as required).

There has been no formal public estimate of the size of the RGL claim, but WEIF investors have now recovered a maximum of approximately 80% (assuming full payout by the LFSL scheme) of the Net Asset Value of the fund at the point of suspension in June 2019. The proceedings will include claims for opportunity loss. The value of any individual claim will depend on specific circumstances.

As with any litigation, there are risks to be considered. RGL’s website includes FAQs designed to answer concerns an investor may have regarding the costs of the proceedings, the funding and insurance arrangements and so on. These can be viewed here. 

ShareSoc also highlights certain risks that potential claimants may wish to consider:

  1. While the claim is structured on a no-win-no-fee basis, it involves the claimant entering into various contracts. The personal liability associated with these contracts is offset by the provision of litigation funding and insurance
  2. There is reliance on a contract of insurance to protect the claimant in the event of any adverse cost award. RGL has taken measures to minimise any risk of non-payment by the insurer
  3. Should adverse costs arise, these are likely to be allocated pro rata based on the number of claimants, not on the size of individual claims. They are covered by the ATE insurance
  4. Changes to the LMA can only be made by a Costs KC, but only where he / she considers such change to be in the claimants’ interest
  5. There may be a scheme of arrangement or regulatory intervention (for example a FCA compensation scheme) benefitting all potential claimants (i.e. there may be a benefit in not acting)
  6. Should claimants receive any recovery other than through RGL, the full amount of that recovery (not just the 25% fee) is technically payable to RGL to be allocated amongst all claimants
  7. Once a WEIF investor has joined the claim, they will be responsible for their costs and potentially their proportion of the HL’s costs if they withdraw
  8. Claimants may be required to cooperate with the case, including testifying in court

ShareSoc has reviewed the claim and the associated documents. We have considered:

  1. The no-win-no-fee structure
  2. The claimant’s 75% share in any recovery, however small
  3. The risks identified herein and on the RGL website
  4. Counsel’s opinion
  5. RGL’s status and reputation

In our view the benefits of joining the RGL claim outweigh the risk and administrative effort involved in doing so for all but the very smallest holdings in WEIF.

Potential claimants should consider their own position carefully, and should read the claim documents, study the RGL FAQs and, if necessary, seek legal advice.

Note on FOS claims

Before making an application to the FOS, claimants must first complete Hargreaves Lansdown’s (HL) formal complaints procedure and ensure their application to the Ombudsman is made within six months of receiving Hargreaves Lansdown’s final response letter. There are procedural time limits set by the FOS that differ from statutory limitation periods applicable in court proceedings. It’s advisable to seek independent legal advice to understand how time limits may apply to your specific case. As a general guideline, you should complain to HL or the FOS within six years of the event you’re complaining about or, if later, within three years of becoming aware (or when you should reasonably have become aware) that you had cause to complain. The FOS may also be able to consider a complaint if there are exceptional circumstances that account for the delay.

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The Leigh Day Group Claim Against Link Fund Solutions Limited

In November 2020, after careful due diligence, ShareSoc elected to endorse the action proposed by Leigh Day, a leading litigation firm. Leigh Day closed its claim to new claimants at the end of February 2023 and, consequently, ShareSoc withdrew its endorsement at that time.

Leigh Day’s investigations led it to believe that Link allowed WEIF to hold excessive levels of illiquid or difficult-to-sell investments, and that this caused investors significant harm.  They considered that Link breached the rules of the FCA Handbook and failed to properly carry out the management function of the Woodford Equity Income Fund.

Leigh Day accepted clients on a no-win-no-fee basis with each claimant’s contribution to the costs of the litigation being capped at no more than 30% (including VAT) of any compensation received. Leigh Day secured the necessary funding and insurance.

No legal claims have been announced for investors in WIIF, WPCT or Hargreaves Lansdown’s MMFs.

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ShareSoc’s Endorsement of the Leigh Day Claim

 We considered:

  1. the relevant Counsel’s opinion
  2. the status and reputation of the firm
  3. the fact that no payment is required from claimants
  4. the level of the cost cap
  5. the proposed distribution mechanism for distribution of any award.

      We concluded that it was in the interest of individual investors to join the Leigh Day claim. We reviewed the situation in November 2022 and reaffirmed our view at the time. The endorsement was withdrawn following Leigh Day’s decision not to accept further claimants.

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      Join the ShareSoc Woodford Campaign

      To join the Woodford Campaign, please complete the form at the bottom of this page.

      Your personal data will be held securely and confidentially, in accordance with our privacy policy. When you join the campaign, you will be registered as a member of ShareSoc, if you are not already a member. You can choose to join as a full member or remain an associate member free of charge.

      Join and support ShareSoc as a Full Member. We are currently offering Full membership for only £42.50 (normally £57.50 a year) CLICK HERE
      If you prefer to join our campaign as an Associate (free) member, CLICK HERE.

      If you wish to make a one-off voluntary contribution to support the activities of ShareSoc please go to this page of our website: Donations. 

      Campaign Members’ Forum

      ShareSoc has set up an exclusive Forum for ShareSoc Woodford Campaign members to exchange views, as well as a ShareSoc Facebook Group which is quite active. Join our campaign to access and contribute to the forum.

      Forum and Facebook discussions are moderated. Libelous comments, threats, and discussion of privileged matters will not be permitted. Critical opinions are of course to be expected, but we ask contributors to be polite and observe basic courtesies. Comments which fail these tests will be removed.

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      How to Assist in the Campaign

      The ShareSoc Woodford Campaign is led by Cliff Weight. We urge anyone who would like to assist in the Campaign to get in touch initially via an email to  info@ShareSoc.org noting any particular interests and skills you have.

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      Press Coverage

      Links to the latest media coverage are on the Woodford Forum https://www.sharesoc.org/forums/topic/latest-news/

       

      Fill the form below to ShareSoc Woodford Campaign

      Post Date: November 19, 2020