Woodford investors offered up to $292 mln over fund failure

Link Administration Holdings

20/04/2023 09:07

By Kirstin Ridley
       LONDON, April 20 (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  LNK.AX .
    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)

 (Reporting by Kirstin Ridley; Editing by Sharon Singleton)
 ((kirstin.ridley@thomsonreuters.com; +44 (0) 207 513 5666;))