Investors who lost money when a fund managed by well-known stockpicker Neil Woodford collapsed are due for compensation.
The city’s regulator, the Financial Conduct Authority (FCA), said people who had money invested when the fund was suspended could receive a share of £235million in redress.
That would work out to around 77p for every pound invested.
In order for the money to be paid out, the investors must agree to the plan.
In addition, various other conditions must be met, such as B. Sale of some assets.
The FCA’s Therese Chambers said the proposal offered the “best possible outcome” for the 300,000 trapped investors who lost money.
Mr Woodford was one of the UK’s most prominent investment managers and when he launched his own managed fund he achieved an impressive reputation. He was as close to a household name as one can get in the investing world.
Investors ranging from ordinary people to pension funds put money into the Woodford Equity Income Fund. At its peak, the fund reportedly had over £10bn under management.
But as they grew concerned about the investments being made on their behalf, many withdrew their money. More than £500m was withdrawn in four weeks and in June 2019 the fund was frozen. It was later closed and is being wound up.
- The spectacular fall of fund manager Neil Woodford
The fund manager who made this decision was Link Fund Solutions. As the fund’s authorized corporate director, he was responsible for ensuring that the fund was managed at appropriate levels of liquidity and risk and that all investors were treated fairly.
FCA said Link made “critical mistakes and errors” in his duties. As a result, those who had money in the fund when it was suspended were left with a disproportionately large portion of the remaining assets that were less accessible and difficult to use to repay investors who wanted to exit the fund. Almost four years later, some of these assets are still unsold.
FCA and Link Group have agreed a payout of around £235m to these investors, funded in part by the sale of the Link business. This is less than a previous statement by the FCA, which suggested investors would receive a £298m stake.
Investors are now receiving a letter about the proposal and should receive more information on the schedule of events in July. You must vote to approve the deal for the payments to be made.
“It would be a surprise if Woodford’s investors didn’t approve the deal given how long it has dragged on,” said Ryan Hughes of investment platform AJ Bell.
“Although it will take time for this reparation process to be completed and payments made, investors are one step closer to finally ending this whole sad episode.”
The events that led to the fund’s collapse in October 2019 are still being investigated by the FCA in what it called a “complex” inquiry. The saga also resulted in separate lawsuits on behalf of investors.
Mr Woodford said he was “very sorry for what I did wrong” but criticized Link’s decision to suspend the fund.
Add Comment