Compliance & Regulation

GBP1.3 billion Fraud Claim filed against HSBC

371 investors have reportedly filed a GBP1.3 billion fraud claim against HSBC UK for losses stemming from the firm’s Eclipse Partnerships film investment scheme, stating that the product induced investors into investing based on ‘false promises.’

According to an article by International Investment, the Eclipse Partnerships film investment scheme was created to finance a number of blockbuster films produced by Disney, namely the first two Pirates of the Caribbean sequels, National Treasure 2, Enchanted, Underdogs and Confessions of a Shopaholic.

However, the investors claim that these films were not actively traded, thus leading to potential liabilities and losses.

For its involvement in the Eclipse scheme, HSBC reportedly received GBP25 million in fees. A reported GBP2.3 billion was raised from 750 investors, all of whom took out loans to fund their investments, believing that their returns would cover the loan payments, and more.

Edwin Coe, the law firm representing the 371 investors pressing charges, many of those who invested in Eclipse have declared bankruptcy or are facing demands from HM Revenue and Customs exceeding 10x the amount initially invested. No trade in film rights was made by Eclipse with Disney.

David Greene, Senior Partner, Edwin Coe, said: “It is now clear Eclipse was a passive pass-through model via which the rights to Disney's films circled back to the studio.”

“Eclipse was a sham investment opportunity. It appears the investments made by our clients were simply transferred between funder and Disney entities in a circular, self-cancelling fashion,” he continued.

“It was a risk-free income stream for Disney, HSBC and the lending banks - but financially catastrophic for its unwitting investors. At no point did Eclipse actually exploit, or otherwise trade in, any meaningful film rights of any value from Disney,” Greene said.