FILE PHOTO: Signage is seen for the FCA (Financial Conduct Authority), the UK’s financial regulatory body, at their head offices in London, Britain March 10, 2022. REUTERS/Toby Melville
By Kirstin Ridley
LONDON (Reuters) – Investors in the failed equity income fund run by fallen star stock picker Neil Woodford have been offered up to 235 million pounds ($292 million) in redress after a British regulatory investigation.
The Financial Conduct Authority (FCA) said late on Wednesday that Link Fund Solutions (LFS), once the authorised corporate director of the LF Woodford Equity Income Fund (WEIF), had voluntarily agreed to the proposal with the backing from its Australian parent, Link Administration Holdings.
The failure of the Woodford fund, which managed billions of pounds before it was suspended amid a political and public outcry in 2019, trapped 300,000 investors, triggering the FCA investigation and three London investor lawsuits.
Woodford, once one of Britain’s most high-profile investors, was criticised for holding a large number of hard-to-sell illiquid assets. He suspended the fund after struggling to meet redemption requests following months of underperformance. It was later closed and is being wound up.
The proposed redress falls short of a scheme suggested by the FCA, under which it wanted WEIF investors to receive 298 million pounds. But the regulator said investors should consider a proposal that might allow them to recover 77 pence in the pound.
The offer hinges on the completion of a sale of part of Link, which includes LFS, to Dublin-based fund manager Waystone Group – along with investor and court approval – which excludes Woodford fund-related liabilities.
The FCA said LFS, which was responsibile for ensuring the WEIF operated with appropriate liquidity risk management and controls and that all investors were treated fairly, made “critical mistakes and errors” when managing the fund.
Therese Chambers, the FCA’s head of enforcement and market oversight, said LFS’s actions appeared to have caused significant losses for investors who remained in the fund when it was suspended.
“We believe the proposed scheme offers investors the best chance to obtain a better outcome than might be achieved by any other means and it is in the investors’ interests they be given the chance to consider it,” she said.
($1 = 0.8039 pounds)