Woodford investors offered up to $292 mln over fund failure (updated)

Link Administration Holdings

20/04/2023 12:38

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      Proposed offer falls short of FCA's original demand
    

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      FCA urges investors to consider proposal
    

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      Plan hinges on disposal, court and investor approval
    

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      FCA says Woodford fund manager made 'critical mistakes'
    

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      Lawyer, investor group, say settlement far too little 
    

  
 (Adds lawyer and investor group comment, details)
    By Kirstin Ridley
       LONDON, April 20 (Reuters) - More than 300,000 investors
in the failed equity income fund run by one-time star stock
picker Neil Woodford have been offered potential redress of up
235 million pounds ($292 million) after a four-year British
investigation.
    The Financial Conduct Authority (FCA) said investors should
consider the proposal by Link Fund Solutions (LFS), once the
authorised corporate director of the LF Woodford Equity Income
Fund (WEIF), which was backed by its Australian parent Link
Administration Holdings  LNK.AX .
    The failure of Woodford's fund, which managed billions of
pounds before it was suspended amid political and public outcry
in 2019, triggered the FCA inquiry and three London lawsuits -
and drawn in investment platform Hargreaves Lansdown  HRGV.L .
    Woodford, once one of Britain's most high-profile investors,
was criticised for holding illiquid assets after his fund
struggled to meet redemption requests following months of
underperformance. It was closed and is being wound up.
    The proposed settlement falls short of an earlier FCA demand
that WEIF investors receive around 300 million pounds and LFS
face a 50 million pound fine. But the regulator said the deal
might allow investors to recover 77 pence in the pound.
    Matthew Patching, a lawyer at Harcus Parker, which is
representing thousands of claimants, said investors would be
"outraged" that the FCA was backing a deal that returned only
about one-fifth of their losses.
    Cliff Weight, a spokesperson at ShareSoc, agreed the redress
looked out by "an order of magnitude". 
    The settlement hinges on the sale of part of Link, which
includes LFS, to Dublin-based fund manager Waystone Group, along
with investor and court approval. 
    The FCA said LFS, which was responsible for ensuring the
WEIF operated with appropriate liquidity risk management and
controls and that all investors were treated fairly, made
"critical mistakes and errors".
    Therese Chambers, head of enforcement and market oversight,
said LFS' actions appeared to have caused significant losses for
investors who remained in the fund when it was suspended.
    She said the proposed scheme offered the best chance of the
best outcome. A further investor update is expected in July.
($1 = 0.8039 pounds) 

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