The Financial Conduct Authority (FCA) has issued provisional fines totalling nearly £46 million to Neil Woodford and Woodford Investment Management (WIM) for failings in their handling of the Woodford Equity Income Fund (WEIF), which was suspended in 2019.
FCA issues fines of nearly £46m to Neil Woodford and Woodford Investment Management
The FCA stated in a release that it decided to fine Mr Woodford £5.89 million and ban him from senior management and fund management roles for retail investors.
WIM faces a proposed fine of £40 million. Both parties have referred the decision notices to the Upper Tribunal and may contest the FCA’s findings.
The FCA explained that WEIF’s assets fell from over £10.1 billion in May 2017 to £3.6 billion before its suspension, leaving many retail investors unable to access their funds.
The FCA found that between July 2018 and June 2019, Mr Woodford and WIM made “unreasonable and inappropriate” decisions, selling more liquid investments and buying less liquid ones.
At the point of suspension, only 8% of the fund’s assets could be sold within seven days, far below regulatory expectations. The regulator notes that under the rules in place at the time, investors should have been able to access their funds within 4 days.
The FCA concluded that Mr Woodford had a “defective and unreasonably narrow” view of his responsibilities, including a failure to manage liquidity or properly oversee the fund’s relationship with Link Fund Solutions, WEIF’s authorised corporate director.
“Mr Woodford simply doesn’t accept he had any role in managing the liquidity of the fund,” said Steve Smart, joint executive director of enforcement at the FCA.
