In a rare action in the institutional investment world, Towers Watson is being sued by a former client for “negligent” advice relating to a currency hedge dating back to 2008. The advice was given by the former Watson Wyatt before it merged with the former Towers Perrin.

The action has been taken in the UK, by the British Coal Staff Superannuation Scheme, through a letter of demand sent under the Professional Negligence Pre-Action protocol, a dispute-resolution system in the UK. The US$13 billion fund is claiming a loss of US$72 million between August 2008 and October 2012. Watson Wyatt merged with Towers Perrin in January 2010 to form Towers Watson, one of the largest asset consultants in the world, with more than US$3 trillion under advice.

A filing in the US – where Towers Watson is listed – with the Securities and Exchange Commission said that the claim, partly relating to a currency hedge, followed a US$380 million investment by the fund in an emerging debt strategy.

According to ‘Professional Pensions’ news service in the UK last week, Towers Watson disputes the allegations and intends to defend the action “vigorously”.

The investment was made through BlueBay Asset Management, a European fixed income and alternatives specialist, in a local currency fund. BlueBay, based in London, managed about US$65 billion globally as at September last year. No further details were available, according to the news service.

Like many UK defined benefit schemes, the fund has been struggling to cover liabilities in recent years.