Woodford Investment Management (WIM) has been fined £40 million for management failures of the Woodford Equity Income Fund (WEIF).
Manager Neil Woodford has been fined a further £5,888,800, and banned from holding senior manager roles and managing retail investors’ funds.
Joint executive director of enforcement and market oversight at the FCA Steve Smart commented, “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.”
WEIF was suspended in June 2019. Its value was £3.6 billion at the time, falling from £10.1 billion in May 2017.
The FCA states that Woodford and WIM failed to react appropriately as the fund’s value declined and liquidity worsened, making unreasonable and inappropriate investment decisions. More liquid investments were sold and less liquid ones purchased over, resulting in just 8% of investments being able to be sold within seven days when the fund was suspended. At the time, rules stated that investors must be able to access their funds within four days.
As a result of poor management, the FCA says, investors who remained in the fund rather than withdrawing their investments before its suspension were disadvantaged.
Woodford’s lack of oversight of WIM’s relationship with WEIF’s authorised corporate director Link Fund Solutions was also noted by the FCA. Although it raised concerns about the fund’s liquidity, joint executive director of enforcement and market oversight Therese Chambers stated in 2024, “Link Fund Solutions’ job was to properly manage the Woodford Equity Income Fund and to protect investors’ interests. Their failings led to losses for those trapped in the fund when it was suspended.”
