Law firm Edwin Coe has commenced litigation on behalf of 400 investors against HSBC over its role in facilitating the operation of the Disney film financing investment scheme known as Eclipse.
Money Marketing first reported that affected investors including celebrities and football managers were eyeing up a landmark legal challenge 18 months ago.
The legal action will be financed by London-based litigation funder, Therium.
Former Manchester United manager Sir Alex Ferguson, former England managers Sven-Goran Eriksson and Glen Hoddle, and former Sainsbury’s chairman Peter Davis were among around 780 investors who put £2.2bn into the scheme between 2006 and 2008.
No qualifying film rights investments were made by the Eclipse scheme’s various administrators, leaving investors with tax bills up to 20 times the amount they had invested on non-existent tax deferrals.
The 400 claimants in the case against HSBC are seeking damages in excess of £150m with the trial expected to be heard next year at the earliest.
Former HSBC Private Bank UK and Ernst & Young employee Neil Bowman and Tim Levy of now-liquidated advice firm Future Capital Partners have since been identified as the scheme’s ringleaders.
It is Edwin Coe’s case that HSBC was Bowman’s employer during the time of Eclipse’s existence, and that the bank partnered with Future Capital to provide “various services connected with the formation, financing, structure and operation of Eclipse.”
The Eclipse scheme was marketed with the help of HSBC to investors who were then induced to invest in Eclipse, believing it represented a genuine investment in Disney films and would be operated lawfully, Edwin Coe claims.
It is alleged that it was intended by Eclipse promoters, HSBC and Future Capital Partners to be an artificial model engineered “in such a way that capital contributions made by investors were paid out to the promoters of Eclipse including HSBC.”
Edwin Coe says other monies purportedly loaned to investors by Barclays and Bank of Ireland for the purpose of investing in Eclipse were circulated in an non-commercial way so as to generate a risk-free income stream.
Edwin Coe issued a pre-action letter to HSBC on 4 February, which has been seen by Money Marketing.
It states Barclays also provided loans to investors in Eclipse along with its wholly-owned subsidiary, Eagle Financial and Leasing Services.
Clients believe both Barclays and the Bank of Ireland are also liable to investors, Edwin Coe adds.
The case around Eclipse went to the Supreme Court in 2016 after HM Revenue and Customs demanded payment of disputed tax bills.
Edwin Coe says a number of investors face bankruptcy as a result.
Edwin Coe senior partner and head of litigation David Greene says: “These partnerships were a complete sham, embroiling unwitting sports stars and other individuals keen to plan for their long-term financial security.
“In contrast, they were a ‘get rich quick’ scheme for those who devised them including HSBC – receiving huge commissions on the back of millions of pounds worth of risk-free investments.
“In 2009, having profited from the schemes, HSBC shut down the department dedicated to this misconduct but, now exposed, should own its responsibility. Barclays and Bank of Ireland are also put on notice that my clients hold them equally in the frame.”
HSBC told Money Marketing it is not yet issuing comments on the case.