Not upheld: Investment mis-selling complaint against Hargreaves Lansdown Asset Management Limited (HLAM)

Decision detail

Summary

Mr C complained that HLAM failed to protect him from a pump and dump scam involving OST shares, which he purchased between June and July 2025 after being directed to do so by fraudsters via social media. Mr C claimed HLAM breached Market Abuse Regulation obligations and sought £13,188.58 in compensation plus interest. HLAM argued it provided only an execution-only service with no advisory obligations and that OST was a legitimate NASDAQ-listed security. The ombudsman found that execution-only platforms lack visibility of the external factors that characterise pump and dump scams (social media, private messaging, impersonation) and that sudden trading interest can appear as legitimate market behaviour. The ombudsman concluded that NASDAQ and its regulators bear primary responsibility for detecting market abuse, and there was insufficient evidence that HLAM should have reasonably suspected manipulation. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that HLAM provided an execution-only service and therefore had no obligation to assess investment suitability or provide advice. The ombudsman reasoned that pump and dump scams are difficult for execution-only platforms to identify because the key features (social media, private messaging, impersonation) occur outside the platform, and sudden trading interest can appear as legitimate market behaviour. The ombudsman noted that NASDAQ, as an established regulated exchange, is primarily responsible for detecting market abuse. The ombudsman found insufficient evidence that HLAM should have reasonably formed suspicions of market manipulation under MAR Article 16. The ombudsman also noted that Mr C continued trading after reporting concerns, demonstrating his willingness to accept the investment risk.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website