Eddie Jordan has taken legal action against banking giant HSBC over a ‘low risk’ £47m loan that resulted to a £5m loss.
Former Formula 1 team owner Eddie Jordan is embroiled in a legal battle against HSBC over a controversial £47 million loan that he claims resulted in a staggering £5 million loss.
The lawsuit, filed in the High Court in London, raises serious questions about the banking giant’s practices regarding the marketing of complex financial products to sophisticated investors.
Jordan is not just a name in the Formula 1 world; he is a figure synonymous with the sport’s evolution in the 1990s and early 2000s. His team, Jordan Grand Prix, competed in F1 from 1991 to 2005, achieving notable success and becoming a beloved part of the racing community.
The 76-year old has worked as a pundit for various outlets and currently runs his own podcast alongside David Coulthard. Amid the announcement earlier this year that Adrian Newey was to leave Red Bull Racing, it became known that Jordan was Newey’s manager.
The Irishman has been a client of HSBC Private Bank since 2009. However, his investment vehicle, Pendragon Investment Holdings (PIH), alleges that the bank pressured him into taking out a loan to invest in the HSBC GIF Global Credit Floating Rate Fixed Term Bond Fund.
The fund was marketed as a “low risk” investment, with assurances that losses would be minimal, confined to a stressed scenario where losses would not exceed 0.98%. However, the reality proved to be starkly different, with the fund suffering a loss of approximately 10% of its value.
Jordan’s claim centers on the assertion that HSBC misrepresented the risks associated with the bond fund, which included significant exposure to non-investment grade assets, particularly in volatile markets such as China, Russia, Turkey, and Zimbabwe.
The exposure contradicts the bank’s assurances about the investment’s safety and aligns poorly with Jordan’s stated investment objectives of income generation and capital preservation.
In his legal filing, Jordan seeks nearly £5.5 million from HSBC, which includes the difference between the original investment and the current value of the bond, along with interest on funds that were subject to margin calls due to the investment’s poor performance.
The claim alleges that HSBC executives repeatedly misrepresented the likelihood of losing more than 1% of the capital invested and failed to consider Jordan’s risk appetite when promoting the fund.
