Boohoo is facing a new investor lawsuit in the UK after allegations regarding the mistreatment of workers in its Leicester factories caused its share price to plummet.
Law firm Fox Williams filed a lawsuit against the Boohoo Group on behalf of a group of 49 institutional investors last month, according to City AM.
The fast-fashion pureplay first became embroiled in a modern slavery row in 2020 after an investigation by The Sunday Times revealed that employees at factories in Leicester were being paid as little as £3.50 an hour.
The allegations were later verified by an independent review conducted by barrister Alison Levitt KC.
Boohoo’s share price fell after the report hit headlines, reducing its market value by more than £1.5bn.
The new claim says that investors who purchased shares in the lead-up to the 2020 exposé suffered “huge losses” due to the drop.
The investors also claim that Boohoo made “untrue or misleading statements and failed to disclose or delayed the disclosure of material about the matter to the market”, which breaches obligations under the Financial Services and Markets Act 2000.
Fox Williams is understood to be seeking to recover damages, interest and costs for the investors involved, but did not disclose the amount.
Fox Williams partner Andrew Hill said: “Boohoo is a prominent example of a company that failed to live up to its environmental, social and governance (ESG) responsibilities and caused significant harm to investors. We believe that our clients have a strong case for compensation.
“This is a landmark case that will test the legal framework for securities litigation in the UK and the role of ESG factors in corporate governance and disclosure.”
A Boohoo spokesperson said: “We have been made aware of a claim that is being brought by certain shareholders. The company strongly contests the allegations and will vigorously defend any claim.”
Boohoo is understood to have appointed law firm Herbert Smith Freehills.
Boohoo also hit headlines last week after it backtracked on plans to pay millions of pounds in bonuses to its top team due to significant backlash from shareholders amid ongoing losses at the retailer.
No comments yet