The FCA has fined Neil Woodford £5.9m and Woodford Investment Management £40m for their failures in managing the liquidity of the Woodford Equity Income fund (WEIF).
The regulator has also banned Woodford from holding senior manager roles and managing funds for retail investors.
Woodford Equity Income’s value plummeted from over £10bn in May 2017 to £3.6bn in mid 2019, resulting in its suspension. The remaining investors – largely retail customers – were trapped in the fund.
The regulator has concluded that Woodford and his firm made “unreasonable and inappropriate investment decisions” between July 2018 and June 2019 by selling liquid holdings and buying illiquid investments, to the point that by the time of the fund’s suspension only 8% of the investments could be sold within seven days. This breached the rules stating investors should be able to access their funds within four days.
Woodford was also deemed to have failed to provide proper oversight of the firm’s relationship with Link Fund Solutions, the fund’s authorised corporate director, notably after Link raised concerns about the fund’s liquidity.
The FCA previously secured a £230m redress scheme from Link for the investors stuck in the fund when it was suspended.
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.”
Woodford and Woodford Investment Management have referred the decisions to the Upper Tribunal.
