Latest news with #fundcollapse
Times
6 days ago
- Business
- Times
Neil Woodford and his firm fined £46m over fund's collapse
The fallen fund manager Neil Woodford and his defunct firm have been fined £46 million for their role in the collapse of their high-profile fund, and he was banned from any senior City role including managing money for retail investors. The Financial Conduct Authority said Woodford, whose asset management empire collapsed in 2019 after its principal Woodford Equity Income Fund was capsized by a wave of redemption requests, was not fit and proper to run retail funds or hold any senior City role. Woodford, 65, is facing a £5.9 million fine while Woodford Investment Management, of which he is the majority shareholder, is being hit with a £40 million penalty. Woodford's personal penalty was doubled on the grounds that a smaller sum would not have had been a sufficient deterrent to prevent other fund managers making the same choices, the FCA said. The size of the fine was also determined by Woodford's 'extremely prominent profile' in the investment industry and because of the damage he had inflicted on confidence in the wider retail fund management sector. The judgments remain 'provisional' as Woodford, who has repeatedly denied any wrongdoing, is challenging them in the Upper Tribunal. Responding to the watchdog's decision notice, he said he strongly disagreed with it and suggested he would expose the FCA's own regulatory failings in the affair. The tribunal case, he said, would 'shed much-needed light on the events leading to and following the fund's suspension, including the regulator's role in those events'. Hundreds of thousands of investors were left out of pocket when the Woodford Equity Income Fund was suspended in 2019 and later put into liquidation. They have got back £1 billion less than the value of their holdings on the day the £3.6 billion fund was suspended. • Johanna Noble: Woodford scandal shows why we still need to name and shame Woodford's reputation sank from a lionised stockpicking genius to negligent incompetent in the space of a few months. At the heart of the matter was Woodford's refusal to accept any responsibility for managing the liquidity of the Woodford Equity Income Fund so it was able to withstand redemption requests without resorting to a fire sale of assets, the FCA said. At his zenith, Woodford attracted more than £15 billion of institutional and investor money when he defected from Invesco Perpetual with a superlative track record to set up his own firm WIM in 2014. In the four years before the collapse he and his co-founder Craig Newman extracted £98 million in dividends from WIM. Woodford used the money to indulge his passion for Ferraris and Porsches, a stable of horses, a 423-hectare Cotswold farm and a £6.35 million Devon holiday home. • Neil Woodford's tearful video claim: 'We did nothing wrong' The FCA concluded that between July 2018 and June 2019 WIM and Woodford made 'unreasonable and inappropriate investment decisions' and 'disproportionately sold more liquid investments [those that are easier to sell] and bought less liquid ones over this period'. Steve Smart, joint enforcement director at the FCA, said: 'Being a leader in financial services comes with responsibilities as well as profile. Mr Woodford simply doesn't accept he had any role in managing the liquidity of the fund. The very minimum investors should expect is those managing their money make sensible decisions and take their senior role seriously. Neither Neil Woodford nor Woodford Investment Management did so, putting at risk the money people had entrusted them with.' The honours forfeiture committee in the Cabinet Office has come under fresh pressure to remove the CBE awarded to Woodford in 2013 for services to the UK economy. A campaign group including MPs and financial think tanks renewed its call for the honour to be revoked because of the 'terrible harm' he caused. Woodford has argued that the bulk of investor losses were down to the decision to liquidate the Woodford Equity Income Fund rather than reopen it after the suspension pause. The FCA accepted that Woodford's conduct did not amount to a lack of integrity, but was merely negligent.
Daily Mail
6 days ago
- Business
- Daily Mail
Neil Woodford fined £46m and BANNED six years after implosion of his investment firm
Former star fund manager Neil Woodford has been slapped with a multi-million pound fine and a ban from some top city roles, six years after the implosion of his investment firm. The City watchdog on Tuesday issued a damning verdict of Mr Woodford's conduct and performance during the events that led to the collapse of the once-£10.1billion Woodford Equity Income fund. Woodford Equity Income's collapse saw thousands of investors of all sizes across the UK without access to their investment for years, and ultimately nursing heavy losses. The Financial Conduct Authority fined Mr Woodford £5,888,800 and banned him from holding senior manager roles and managing funds for retail investors. His firm, Woodford Investment Management, has been fined £40million. The FCA said Woodford made 'unreasonable and inappropriate investment decisions' and 'held a defective and unreasonably narrow understanding of his responsibilities' as a fund manager. But Mr Woodford and WIM already plan to contest the regulator's verdict, which they have referred to the Upper Tribunal where they will present their case. The FCA has previously secured a £230million redress scheme for investors stuck in Woodford Equity Income when it was suspended after setting out the failures of financial services firm Link in its role as the vehicle's 'authorised corporate director'. But Tuesday marked the first time formal sanctions had been taken against Mr Woodford, who has more recently remerged as a 'finfluencer' with his own investment blog following the failure of WCM Partners in 2021. Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: 'Being a leader in financial services comes with responsibilities as well as profile. 'Mr Woodford simply doesn't accept he had any role in managing the liquidity of the fund. The very minimum investors should expect is those managing their money make sensible decisions and take their senior role seriously. 'Neither Neil Woodford nor Woodford Investment Management did so, putting at risk the money people had entrusted them with.' What happened to WIM? Woodford Investment Management imploded in 2019 after the Woodford Equity Income fund collapsed when investors rushed to the exit in droves amid a sustained period of underperformance. The collapse of WEIF left some 300,000 investors stranded and left to wait five years to be compensated with a fraction of the capital they had entrusted with the fund manager. Neil Woodford had a successful 25-year career when employed by Invesco, where his funds racked up billions of pounds of investment from retail investors and institutions alike on the back of bumper returns. When he struck out on his own in 2014 investors naturally followed into the Woodford Patient Capital Trust, the Woodford Income Focus fund and – crucially – the WEIF. WEIF's initial good run was followed by two years of poor performance, exacerbated by exposure to smaller – sometimes unprofitable – companies and unlisted stocks. Eventually larger investors, such as the Kent County Council Pension Scheme, started pulling out large amounts of money. Others followed suit and the fund's large exposure to illiquid assets meant it was unable to sell assets quick enough to meet outflows, leading to administrator Link forcing its suspension. St. James's Place then terminated Woodford's contract to manage three of its funds. The decision to close WEIF entirely in October 2019 left many investors out of pocket and ultimately led to the demise of Woodford Investment Management. WEIF's assets fell from a high of over £10.1billion in May 2017 to just £3.6billion in the run-up to its suspension. The FCA said Woodford had 'disproportionately sold more liquid investments' - those that are easier to sell - and bought less liquid ones between July 2018 and June 2019 This meant that at the time of suspension only 8 per cent of the fund's holdings could be sold within seven days, breaking City rules that require investors to be able to liquidate their investments within four days. The FCA said: 'WIM and Mr Woodford did not react appropriately as the fund's value declined, its liquidity worsened and more investors withdrew their money. 'This disadvantaged investors who remained in the fund, compared to those who had withdrawn their investment before the fund was suspended. It added that Mr Woodford 'held a defective and unreasonably narrow understanding of his responsibilities'.
The Guardian
6 days ago
- Business
- The Guardian
Neil Woodford and his investment firm fined almost £46m over fund failings
The former UK star stock picker Neil Woodford and his investment management company have been fined almost £46m by the UK's financial regulator over the collapse of his popular equity fund. The Financial Conduct Authority (FCA) has given Woodford a penalty of £5.89m and banned him from holding senior manager roles and managing funds for retail investors and fined Woodford Investment Management (WIM) £40m. The penalties are for failures in their management of the Woodford Equity Income Fund (WEIF), which collapsed in October 2019 after investors, including many ordinary retail customers, rushed to withdraw money in response to a number of poorly performing company investments, including some hard-to-sell illiquid assets. The value of the fund fell from a high of more than £10.1bn in May 2017 to £3.6bn in the run-up to its suspension. The fund was frozen and later closed and wound up. About 300,000 people had invested in the fund, including 130,000 through the investment platform Hargreaves Lansdown, which is being sued by thousands of investors. The FCA's ruling is only provisional, as Woodford and WIM have referred the decision notices to the upper tribunal where each will present their case. The City watchdog concluded that between July 2018 and June 2019 Woodford and his company made 'unreasonable and inappropriate investment decisions', having disproportionately sold more liquid investments – which are easier to sell – and bought less liquid ones over this period. This meant that at the time of suspension only 8% of the investments held by WEIF could be sold within seven days, the FCA said. Under rules in place at the time, investors should have been able to access their funds within four days. WIM and Woodford 'did not react appropriately' as the fund's value declined, its liquidity worsened and more investors withdrew their money, the regulator said. In its ruling, the FCA said Woodford 'held a defective and unreasonably narrow understanding of his responsibilities'. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Steve Smart, a joint executive director of enforcement and market oversight at the FCA, said: 'Being a leader in financial services comes with responsibilities as well as profile. Mr Woodford simply doesn't accept he had any role in managing the liquidity of the fund. 'The very minimum investors should expect is those managing their money make sensible decisions and take their senior role seriously. Neither Neil Woodford nor Woodford Investment Management did so, putting at risk the money people had entrusted them with.'
Bloomberg
6 days ago
- Business
- Bloomberg
UK Fines Woodford £46 Million on Failures Ahead of Fund Collapse
The UK's Financial Conduct Authority fined Neil Woodford, the once-renowned investment manager, and his fund empire a total of £46 million ($61.1 million) over shortcomings in the lead up to the fund's collapse. Woodford himself was fined £5.88 million and banned from holding senior manager roles in the industry and managing funds for retail investors, according to a statement on Tuesday. Woodford Investment Management received a fine of £40 million. Both Woodford and the company are challenging the decision in the Upper Tribunal.
