Fund manager Woodford failed to act with due skill, UK watchdog says (updated)
11/04/2024 11:19
(Adds detail on allegation, reaction from Woodford lawyers)
By Huw Jones and Kirstin Ridley
LONDON, April 11 (Reuters) - Neil Woodford, the former
star stock picker whose flagship fund collapsed in 2019,
trapping around 300,000 investors, had a "defective and
unreasonably narrow" understanding of his responsibilities,
Britain's markets regulator said on Thursday.
Setting out findings in a warning notice about proposed
regulatory against the fund manager and his Woodford Investment
Management (WIM) company, the Financial Conduct Authority (FCA)
said he had failed to ensure sufficient liquidity.
WilmerHale, the law firm representing Woodford and WIM, said
it would challenge the findings, which they labelled
"unprecedented and fundamentally misconceived".
The failure of Woodford Equity Investment Fund (WEIF), after
outsized bets on illiquid assets, sparked an FCA investigation,
three investor lawsuits against LFS (Link Fund Solutions) and
one against investment platform Hargreaves Lansdown HRGV.L ,
which promoted the fund.
The FCA confirmed on Thursday that there were no other
parties under investigation over fund's failure.
WilmerHale said the FCA announcement of enforcement action
came nearly five years after an investigation into the fund's
collapse and focused only on the fund's liquidity profile.
"It is striking that the FCA's only criticisms of Neil
Woodford relate to his involvement in matters relating to the
fund's liquidity framework, which was, in fact, Link's
responsibility ... and the FCA," the law firm said in a
statement.
The framework used to monitor the fund's liquidity were set
by LFS and staff at WIM were told by LFS that the FCA and the
depositary knew those details, WilmerHale said.
"In fact, WIM knew that the FCA had been monitoring the
fund's liquidity continuously since the beginning of 2018," it
added.
Those invested in the WEIF when it was suspended are
starting to receive a share of up to 230 million pounds ($289
million) in redress from LFS, which was approved by London's
High Court in February.
The FCA also said that the fund's authorised corporate
director, Link Fund Solutions (LFS), had failed to act with due
skill, care and diligence in its management of the fund.
The watchdog said it could not provide further details on
proposed sanctions against Woodford.
($1 = 0.7966 pounds)
(Reporting by Huw Jones, editing by Kirstin Ridley and David
Evans)
((huw.jones@thomsonreuters.com; +44 207 542 3326; Reuters
Messaging: huw.jones.thomsonreuters.com@reuters.net))