- After a long silence the FCA accuses the former star manager of shortcomings in the fund scandal
- Woodford slammed for a defective understanding of liquidity issues
The Financial Conduct Authority (FCA) has slammed Neil Woodford for a "defective and unreasonably narrow" understanding of liquidity as it sets out proposed action against the fund manager.
The regulator said it planned to take action against Woodford and his investment firm for failing to "maintain an appropriate liquidity profile" for the Woodford Equity Income fund and for making "unreasonable and inappropriate investment decisions in the face of ongoing redemptions and net outflows".
The Woodford Equity Income was hugely popular and managed billions in investor money but suspended trading in 2019, never to reopen, because of liquidity struggles.
The FCA also alleged that failings by Woodford "materially increased the risk that the Woodford Equity Income fund would need to be suspended and thereby place those investors who did not redeem prior to the point of suspension at a disadvantage."
WilmerHale and BCLP, legal counsel to Woodford Investment Management and Neil Woodford, responded by pointing to the fact that the FCA's criticisms relate to liquidity concerns, a responsibility of the fund's authorised corporate director Link. The FCA has already found that Link "failed to act with due skill, care and diligence" in its role.
The warning notices given to Woodford and his firm are not the FCA's final decisions and both parties have the right to make representations to the Regulatory Decisions Committee. The FCA said it would make its findings public when it reached a final decision, though it could not provide details on any proposed sanctions.
Investors trapped in the fund are receiving redress payments from Link, with £185.7mn paid last month and the possibility of up to £47.5mn later on. The settlement scheme has been controversial, however, with some including investor group ShareSoc arguing that it did not go far enough.
