Ex-Fund Manager, Company Hit With £46M Fine
Former star fund manager Neil Woodford and his investment business have been fined over £46 million by the financial watchdog.
When Woodford Equity Income Fund crashed in 2019, participants tried to take money quicker than the fund could pay out, resulting in over 300,000 losses.
The Financial Conduct Authority (FCA) has temporarily fined Mr Woodford about £6 million and barred him from holding senior management positions or managing funds for non-professional investors. It has fined his fund, Woodford Investment Management (WIM), £40 million.
Mr Woodford, a former high-flying London fund manager, was dubbed "the man who made middle England rich" and "the UK's Warren Buffett."
He established his mark at the investment management behemoth Invesco Perpetual before quitting in 2013 to start his own business.
He was as close to a household name as possible in the world of investing, and investors flocked to his flagship UK Equity Income Fund. At its peak, it had £10 billion in people's money.
Mr Woodford and WIM operated the Woodford Equity Income Fund, which was suspended in June 2019, leaving investors, the majority of whom were ordinary retail investors, unable to access their money.
The fund's value had dropped from a peak of £10.1 billion in May 2017 to £3.6 billion in the run-up to its suspension.
The FCA stated that WIM and Mr Woodford made "unreasonable and inappropriate investment decisions" from July 2018 to June 2019.
According to the watchdog, they liquidated liquid equities that were simpler to sell and purchased harder-to-sell ones.
As a result, at the time the company was banned, just 8% of the investments could be sold within seven days; investors should have received their funds within four days.
According to the FCA, WIM and Mr Woodford "did not react appropriately as the fund's value declined, its liquidity worsened, and more investors withdrew their money".
The FCA stated that WIM and Mr Woodford made "unreasonable and inappropriate investment decisions" from July 2018 to June 2019.
According to the watchdog, they liquidated liquid equities that were simpler to sell and purchased harder-to-sell ones.
As a result, at the time the company was banned, just 8% of the investments could be sold within seven days; investors should have received their funds within four days.
According to the FCA, 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."
Steve Smart, the FCA's joint executive director of enforcement and market oversight, stated, "Being a leader in financial services entails both obligations and profile. Mr. Woodford simply denies having any participation in managing the fund's liquid assets.
"At the very least, investors should expect individuals in charge of their money to make sound decisions and take their senior positions seriously.
"Neither Neil Woodford nor Woodford Investment Management did so, putting at risk the money people had entrusted them with."
Steve Smart, the FCA's joint executive director of enforcement and market oversight, stated, "Being a leader in financial services entails both obligations and profile. Mr. Woodford simply denies having any participation in managing the fund's liquid assets.
"At the very least, investors should expect individuals in charge of their money to make sound decisions and take their senior positions seriously.
"Neither Neil Woodford nor Woodford Investment Management did so, putting at risk the money people had entrusted them with."