HK investors urged to back suit

The organiser of a global action group is calling for Hong Kong investors to join a law suit seeking recompense for those who claim they were mis-sold financial products by financial advisory firm Towry Law International (TLI).

Denis O'Hare, a retired consultant living in Cyprus, has galvanised groups of former Towry Law clients in Dubai, Bahrain, Australia and Japan. The group plans to launch a class-action law suit against Towry Law's parent companies HHG and AMP.

Mr O'Hare is calling on clients of Towry Law Hong Kong to get involved. 'I want to get things moving in Hong Kong because that's where the biggest investor base is,' he said.

Mr O'Hare was motivated to taking action after losing money himself on geared with-profits funds sold by Towry Law Cyprus and after hearing many horror stories, including one of a couple in their seventies being forced to come out of retirement to take up kitchen jobs after losing their life savings.

'I couldn't let them get away with this,' he said.

Towry Law Hong Kong has been plagued by scandal since March when two hedge funds widely sold by the company, Global Diversified Trading and Global Opportunities Trading, collapsed. Since then, further scandals have emerged involving the sale of geared with-profits funds provided by companies, including Circus Capital and Scottish Mutual International. In many cases, investors have faced substantial or total loss on what were supposed to be low-risk investments.

Mr O'Hare said: 'The proposed Class Law legal action covers the Geared With Profit, Circus Protected Growth, Global Opportunities Trading and Global Diversified Trading funds. These were all sold as low to medium risk by Towry Law and have all turned out to be very high risk.

'On all these products there's a common theme. Towry Law failed to tell investors of the real risks; and the reason they failed to do this was because they didn't do their due diligence - and we can prove this.'

Howard Epstein, a senior partner at Class Law, the London-based law firm representing the action group, said there was little doubt over legal liability in this case.

'Towry Law were allegedly selling high-risk products to people with low-risk profiles, leveraging them and not advising them. It's alleged negligence, breach of contract and misrepresentation,' he said.

He estimates that hundreds of millions of pounds, or even billions of dollars, have been lost by investors.

Several Hong Kong investors are already taking legal action against Towry Law under Hong Kong law. However, moves to shut down Towry Law's Hong Kong operations may scupper these legal efforts. Last month Towry Law announced it was closing all its branches except the Hong Kong office, from which all international business would be handled.

Sources suggest that Towry Law Hong Kong last week reached a commercial agreement to pass its clients to another firm. An announcement is expected today.

While Hong Kong law suits might generate a satisfactory ruling, Towry Law is thought to have neither sufficient assets nor insurance in place to cover liabilities financially.

Regardless of where the investments were made or whether local offices have been closed, the best chance of a successful outcome for investors may lie in pursuing the British-based Towry Law Plc and its parent companies under British law.

According to Mr Epstein, there are precedents for British court rulings being used to settle cases involving foreign companies.

'The English courts are quite keen to extend their jurisdiction over foreign situations where there is a sufficient connection,' he said. 'What we are hoping to do is establish the parent's liability because they knew what was going on and they continued to allow the practice.'

Many contracts issued by Towry Law were also made under English law.

Marketing material used by Towry Law also specified that products sold by the company had been through a due diligence process at the British group, which appears not to have been the case.

Mr O'Hare is confident the action group will succeed in getting a settlement for investors and says it is armed with hard evidence. It is also backed by former Towry Law advisers who have sided with investors against their former employer and who claim they too were misled about the products they were selling.

'I think Towry Law will want to settle out of court,' says Mr O'Hare. 'What we want them to see is that we have groups all around the world and the longer they leave it to settle the more they'll have to settle.'

Mr Epstein and Mr O'Hare are planning to visit Hong Kong to meet disgruntled Towry Law clients and assess their claims. Anyone interested in learning more should email Mr O'Hare at [email protected]. [email protected]