Ex-F1 boss Jordan in legal fight with HSBC over ‘failed’ bond deal | Business News

Former Formula 1 team owner Eddie Jordan has launched a multimillion-dollar legal fight against HSBC over the alleged mis-selling of a complex security in which he invested.

Sky News has learned that Jordan, who became one of motorsport’s most flamboyant and successful figures during a period at the helm of his eponymous F1 team, has taken action against the private arm of HSBC at the High Court in London .

Jordan is seeking almost £5m in compensation from the FTSE-100 lender for losses it claims it suffered when it invested £46.9m in the HSBC GIF Global Credit Floating Rate Fixed Term Bond Fund in 2019.

He also demands that the bank pay him interest on the money that was subject to margin calls that he allegedly lost as a result of deteriorating investment performance.

In total, Jordan’s investment vehicle, Pendragon Investment Holdings (PIH), is asking for around £5.5 million from HSBC, according to people familiar with the case.

A legal filing seen by Sky News includes an allegation by PIH that HSBC executives repeatedly misrepresented the fund’s default risk and failed to take into account Jordan’s stated appetite for risk.

The former F1 executive had been a client of the London-based lender since 2009, according to the document.

The legal fight will cast new scrutiny on how banks market complex products to sophisticated investors, following a series of similar cases in the aftermath of the 2008 global financial crisis.

One such showdown saw another prominent businessman, Air Miles founder Sir Keith Mills, engage in a public legal battle with Coutts – the private bank owned by NatWest Group.

Mr. Jordan’s lawsuit alleges that HSBC not only misrepresented the likelihood of losing more than 1% of the capital it had invested, but also that the bond portfolio in which the fund invested included significant exposure to non-investment grade assets. .

These included, PIH said in its filing, “significant exposure to the Chinese real estate sector, as well as the Russian, Turkish and Zimbabwean markets, none of which could reasonably be described as low risk.”

HSBC’s selection of high-yield bonds for the fund’s portfolio meant, PIH added, that its construction was “fundamentally flawed” because it was not aligned with Mr Jordan’s investment objectives of income generation and capital preservation .

The legal document also raised the possibility that HSBC used the construction of the fund “for its own commercial reasons (including the Defendant’s need or desire to get rid of exposure to certain securities on its own balance sheet)”.

It was not clear how many other HSBC clients had invested in the fund at the center of the dispute, or whether the bank could be subject to any further legal action in relation to it.

In a statement issued to Sky News, a PIH spokesperson said: “Pendragon is fully committed to its claim against HSBC and intends to see it through to completion in order to recover the losses it considers to have arisen from the actions of bank, as detailed in your claim.”

Although not financially relevant to HSBC, its response to Mr Jordan’s legal complaint will come at an important time for the bank.

This month, it named Georges Elhedery, its chief financial officer, as its next group chief executive.

Elhedery will replace Noel Quinn, who is considered by investors to have done an effective and competent job running a company caught in some of the world’s fiercest geopolitical headwinds.

On Friday, HSBC’s London-listed shares closed at 665.2p, giving it a market capitalization of almost £123 billion.

HSBC declined to comment.