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OUTSIDE PAYWALL: FCA threatens key Woodford enabler Link with fine & customer redress of up to £306 million: “nomates Neil” next?

By Tom Winnifrith | Tuesday 13 September 2022


 


The FCA has warned a potential purchaser of fund administrator, Link, that it must provide up to £306 million to pay fines for Link’s Woodford blunders. Some of this may go to the victims of Neil Woodford. But there are likely to be other measures handed out by the chocolate teapots.

Link was the ACD of Woodford’s unit Trust. While Woodford himself managed the trust and his company, Woodford Investment Management, handled the marketing, it is ultimately the ASCD which is responsible for any fund. The ACD is thus meant to check that everything the actual fund manager does is by the book. Clearly, as this website started to expose from 2015 while Fleet Street – to a person – sucked Woodford PR cock, nomates Neil was breaking rules and doing dodgy share dealings left right and centre.

The FCA needs to give its consent to any takeover of a regulated entity so it has given its blessing to the purchase of Link Fund Solutions Ltd (LFS), which managed the LF Woodford Equity Income Fund (WEIF) by Canada based Dye and Durham. In short the FCA has given its blessing subject to the £306 million fine.

It says that it is “likely to seek to require LFS to pay a financial penalty and/or consumer redress. However, this is not a final decision – LFS can challenge any proposed action at the Regulatory Decisions Committee, the FCA’s independent decision maker in contested disciplinary cases, and, then through the Upper Tribunal if LFS chooses to exercise its right to do so.”

The FCA, weakly, says that this reflects Links failure to manage Liquidity at the Woodford fund which ultimately let to it being gated. But Link failed on so many other matters, notably on failing to stop some highly suspect valuations whereby Woodford invested large sums at a low price in private companies then led a small fund raise at a much higher price so justifying a bogus market up of the earlier bigger investment.  Link also failed to stop some very unusual share transfers between Woodford funds.

The FCA stresses that the Link fine is perhaps only for starters “It does not reflect any amount which may be owed to anyone else, including members of the fund, as a result of potential wrongdoing by other parties. The FCA is continuing to investigate matters relevant to the operation of the fund. FCA-determined redress is based on misconduct rather than losses caused by fluctuations in the market value or price of investments.  There are multiple parties under investigation in relation to the circumstances that led to the suspension of the LF Woodford Equity Income Fund. These investigations continue and they will consider any further failings which may have negatively impacted investors.”

It is better than nothing but it is not firms who commit or enable fraud but individuals. Any redress for punters who ignored our more than 1000 warnings in articles, podcasts, videos and talks (see HERE) and instead believed Woodford’s pals at the FT, the Mail on Sunday, The Sunday Times and elsewhere  who said what a jolly good chap he was right to the bitter end, is welcome. But to clean up the system individuals involved in managing or promoting or supervising this bezzle need to be

a) banned from financial services for life

b) fined an amount equivalent to their winnings. And if that leaves them destitute so much the better.

Only such measures against individuals will clean up this industry by clearing out bad actors and by sending a signal to other actors who may be tempted to sin that crime does not pay.

Those who must be punished in this way start with Woodford himself and his business partner Craig Newman. But must also include named staffers at Link, the directors of the Woodford Patient Capital Trust (WPCT), notably Chairperson Susan Searle and individuals at Hargreaves Lansdown who advised punters to keep buying Woodford funds while secretly selling down the firm’s own exposure in its managed funds.

Of course little of that will actually happen

 

 

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