Three years after savers ran out of their nest-egg in Neil Woodford’s flagship fund, they’re starting to get answers.
City watchdog said this week it could force Link, which is responsible for overseeing the management of Woodford’s own fund, to pay a fine of up to £306 million.
For investors who have lost nearly £1 billion since LINK closed the Woodford Equity Income Fund (WEIF) in 2019, this may seem like a small reimbursement.
The payout: City watchdog said this week it was likely to force the link to pay a fine of up to £306m to the firm responsible for oversight of the former Neil Woodford fund.
The fund was frozen after an influx of investors tried to withdraw their money due to poor performance on Woodford’s part.
Of the £3.7 billion in the fund, investors received £2.5 billion. 118.5 million pounds tied up in assets yet to be sold.
The remaining £1 billion disappeared.
Here, we explore some of the parties involved, and whether they can be pursued. , ,
While it was Woodford himself who caused a problem for investors, holding much of his money in risky, liquid stocks that could not be sold in a hurry, there is little opportunity for savers to target him directly. .
It was Link, rather than Woodford, who had a duty to investors – a distinction that became more depressing as victims watched as the 62-year-old renovated his multi-million-pound holiday home in Devon while he cared for his loss. Was doing.
An investor-led lawsuit against the fallen fund manager seems unlikely, but he and his key employees have been investigated by the FCA.
Three years after this investigation began, savers will be hoping the watchdog will soon announce its results — and fine the fallen fund manager.
Given that Link was responsible for overseeing Woodford’s management of the WEIF on behalf of the savers, it is perhaps not surprising that he was first in the firing line.
Now part of Australian-listed Link Group, but formerly part of outsourcer Capita, the firm has been forced to pay £32 million and £66 million to investors previously involved in the Arc Crew and Connaught Fund debacle.
After being heavily involved in the Financial Conduct Authority’s (FCA) investigation into the Woodford scandal, it could face a £306 million fine – but shared among the roughly 300,000 investors, it would not amount to much.
Link is also being followed by law firms Leigh Day and Harkness Parker, who have joined forces on behalf of about 13,000 WEIF investors to take Link to court.
Merrill Hodgson-Teal, an attorney for Leigh Day, said the FCA’s suggested penalty was “not enough to compensate the many thousands of people who suffered large and life-altering financial losses who invested in this fund”.
Lawyers are claiming that LINK failed in its duties to investors until the fund’s suspension, and breached FCA guidelines.
Savers can still join the case. But Hodgson-Teal warned that the FCA may not allow them to claim part of the £306 million if they are expecting legal damages.
The FCA has yet to confirm the details of the Links redress package, but Woodford victims may have a difficult decision whether to take the money FCA has pulled from Link or take the firm forward in court in the hope of a bigger salary. -out.
The UK’s largest investment platform attracted anger even during the Woodford debacle as it continued to recommend WEIF until the fund’s suspension.
Savers relying on Hargreaves Lansdowne’s (HL) Wealth 50 best-buy list for advice were furious at WEIF’s closure.
Just a month ago, HL’s then head of research, Mark Dampier, predicted that the beleaguered Woodford was ready to turn a corner. Dampier has since retired.
HL is also the target of the FCA’s investigation, although the regulator has yet to announce whether it plans to penalize HL because it has links.
Boss Chris Hill apologized to clients, but HL still faces a lawsuit brought by litigation company RGL Management, which works with lawyers to build cases on clients’ behalf.
The Mail understands that RGL is due to file its claim — which will also target Link — within weeks.
Unfortunately, savers are unlikely to be able to sign up for many legal cases, so will have to choose between RGL and Leigh Day/Harkus Parker.
Home: Woodford Devon is renovating its multi-million pound holiday home in Salcombe, Devon (pictured)
A lesser-known party that became embroiled in the Woodford disaster was the Northern Trust (NT), the so-called Depository of WEIF.
Just as Link should have kept Woodford in control, the NT was accused of keeping an eye on Link.
Questions arose as to whether the NT challenged the link on Woodford’s steady accumulation of hard-to-sell stock. Again, this would depend on FCA testing to assess whether the NT is disturbed.
Guernsey Stock Exchange
An obscure stock market operating on the International Stock Exchange (TISE), Guernsey, found itself in the limelight after Woodford used it to list shares held by the WEIF.
Woodford had liquidated several early-stage companies that were not listed on the stock market – a risky venture because these businesses are harder to sell in a hurry, and they have to comply with low governance requirements.
For this reason, FCA rules state that they should only hold 10 pc of the fund’s holdings. But Woodford found himself breaking this hat over and over again. Instead of getting rid of the stakes, he listed them on TISE in a cynical attempt to dodge FCA rules.
TISE was criticized by some industry insiders for not conducting further investigations on Woodford.
The exchange claimed it had done nothing wrong, and blamed the FCA for failing to act swiftly enough when it reported the concerns.
It may join the FCA investigation,…
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