Link Fund Solutions says Woodford investors approve redress scheme (updated)

Link Administration Holdings

14/12/2023 15:33

(Adds details, background from paragraph 4)
    By Kirstin Ridley
       LONDON, Dec 14 (Reuters) - Investors trapped in a
collapsed fund run by former star stock picker Neil Woodford
have overwhelmingly backed a proposed redress scheme of up to
230 million pounds ($290 million), the fund's authorised
corporate director said on Thursday.
    Link Fund Solutions (LFS) said around 93.7% of investors who
voted for the scheme, representing 96.1% of the value, had
approved a proposal that the Financial Conduct Authority (FCA)
has encouraged bruised investors to consider.
    "This is an important step for the scheme, and the
establishment of the settlement fund, which LFS has always
believed is the best option available for investors as it
materially enhances the amount of redress available from LFS and
provides the fastest route for redress possible," LSF said in a
statement.
        LFS said as the vote has comfortably met the statutory
threshold for approval, it will ask the court to approve it at a
hearing on Jan. 18.
    The Woodford Equity Income Fund (WEIF), which once managed
more than 10 billion pounds, was suspended in 2019, trapping
300,000 investors and sparking an FCA inquiry and three investor
lawsuits against LFS and one against Hargreaves Lansdown
 HRGV.L , the investment platform that promoted the fund.
         More than 54,000 investors attended a scheme meeting in
person or by proxy, LFS said.
  
        The settlement proposal falls well short of the 1.0
billion pound-plus redress mooted by some claimant law firms.
But LFS has said the scheme will allow it to distribute to
investors the maximum amount possible in the shortest possible
time.
  
        Woodford, once one of Britain's most high-profile fund
managers, was sacked after over-sized bets on hard-to-sell
illiquid assets left him struggling to meet redemption requests
following months of underperformance.
  
        The FCA has said LFS made "
    critical mistakes and errors
    " in how it oversaw the fund's liquidity risk management and
controls. 
  
        But it also advised investors to 
    accept
     the redress scheme, rather than face lengthy and costly
court battles. It has said LFS's scheme does not reflect
compensation that might be owed by others over potential
wrongdoing. 
  
        "
    Multiple parties
    " remain under investigation over events that led to the
WEIF suspension, the FCA has said.
  
($1 = 0.7956 pounds)
    

 (Reporting by Kirstin Ridley, editing by Huw Jones)
 ((huw.jones@thomsonreuters.com; +44 207 542 3326; Reuters
Messaging: huw.jones.thomsonreuters.com@reuters.net))