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Woodford’s return and its aftermath

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  • News of Neil Woodford’s comeback plan has led to amplified calls for a full investigation into the failure of his old fund
  • Woodford may now be the subject of further scrutiny, while lawsuits are pending on behalf of its former investors.

With around $ 200 million still stranded in Neil Woodfords’ doomed flagship fund, the disgraced investor was still unlikely to receive a warm welcome in public life. Yet his hinted return could ultimately trigger more than an angry reaction from investors.

In an interview published over the weekend of February 13, Woodford told the Sunday Telegraph he was very sorry for what I had done wrong, but otherwise he showed few signs of contrition. He blamed others for the demise of his equity income fund, saying his investment approach would ultimately have been justified.

He also detailed plans for a return via Jersey-based company WCM Partners (Woodford Capital Management), a firm that is expected to focus on the biotech sector and only raise funds from professional investors for now. Woodford said he didn’t want to hide and beat me about things that happened the best part of two years ago.

Still, the reappearance has drawn close scrutiny of Woodford’s plans while amplifying calls for a full investigation into the original scandal. Activists Gina and Alan Miller published an open letter to the Treasury Select Committee on February 16, warning of the alarming consequences of a regulatory and public policy comeback.

It should be a very serious source of public policy concern that high profile people like Woodford may be allowed to start negotiating again, with the slate seemingly wiped clean, as more than 300,000 people … scramble to reach make ends meet after seeing their savings decimated [in the Woodford fund]added the letter.

The Millers criticized the narrow scope and length of the Financial Conduct Authority (FCA) investigation, which began shortly after the Woodford fund was suspended in June 2019.

The reviews seem to have struck a nerve. In a rare out-of-hours statement released on the evening of February 16, FCA’s director of enforcement and market oversight, Mark Steward, said he would share information with the financial regulator of Jerseys if Woodford asked to operate in the jurisdiction. The Jersey Financial Services Commission later noted that itself, at the time of Woodford’s statements, “no request has been received or processed to authorize WCM Partners to operate as a Jersey company or management company authorized investment in Jersey “.

As part of the FCA missive, Steward also said his investigation into the Woodford scandal was adequately resourced and was progressing. He dismissed criticism of its scope as speculation. The FCA has not confirmed who or what it is investigating, in part for legal reasons.

The FCA’s statement is unlikely to overcome any concerns about the delay in releasing the investigation findings. On February 18, Treasury Selection Committee Chairman Mel Stride MP released a brief statement calling on the regulator to indicate when a conclusion of its investigation is expected.

Go to court

Investigations take long and regulations can inevitably be slow to catch up. But investors who found themselves trapped in the main Woodford fund can at least seek financial compensation, with various legal claims stemming from the scandal.

The first name on the blocks was Leigh Day, who recently invited investors to join a lawsuit against Link. The company, whose claim is backed by ShareSoc, will argue that Link was responsible for the operation of the main Woodford fund, adding that Link broke FCA rules by allowing the fund to hold excessive levels of illiquid or difficult-to-manage investments. sell, resulting in significant losses for investors. ShareSocs Cliff Weight said some 4,600 investors joined the claim as of mid-February. Link has previously defended his actions as in the interests of investors.

Other complaints are in progress. Investor column understands that a Harcus Parker claim against Link is expected to begin relatively soon. Separately, RGL Management said claims will soon be launched against Link and Hargreaves Lansdown, with Leigh Day also considering the latter option. Slater and Gordon have investigated possible claims related to Woodford.

Like Leigh Day, Harcus Parker and RGL say they have a large number of investors on board. But as RGL chief executive James Hayward notes, investors need to be very careful about which group they choose to represent them, with potentially significant differences in areas such as fees charged.

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