Boohoo has been hit with an investor lawsuit in the UK after allegations of modern slavery breaches wiped more than £1bn from its share price.
A group of institutional investors claim the fast fashion giant failed to disclose serious labour rights violations at its suppliers’ factories and keep its past promises of fair production.
A report in The Sunday Times in 2020 revealed multiple alleged incidents of the mistreatment of workers, highlighting that some employees were paid as little as £3.50 an hour and some had been forced to work in unsanitary conditions amid the Covid-19 pandemic.
Boohoo’s share price plummeted after the exposé was published, with more than £1.5bn wiped off its market value.
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The claim argues investors that purchased shares in the years leading up to 2020 report suffered huge losses as a result of the share price drop.
The investors allege that Boohoo made untrue or misleading statements and failed to disclose or delayed the disclosure of material about the matter to the market, breaching its obligations under the Financial Services and Markets Act 2000.
Law firm Fox Williams said it was seeking to recover damages, plus interest and costs, for the investors, but did not give an amount.
Head of dispute resolution and partner Andrew Hill said: “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.
“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.”
A spokesperson for Boohoo told Retail Gazette: “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.”
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