As reported by FT Adviser, Neil Woodford's flagship Equity Income fund had been struggling with outflows that were running at a net £9mn a working day in May 2019.
To make matters worse, in June 2019, Kent County Council asked to withdraw all of the £250mn it had invested with him through its pension fund and Kier Group, one of the fund’s substantial holdings, announced a profit warning that prompted its shares to plummet by 40 per cent.
This triggered the suspension, prompting Woodford to try and sell shares to improve the fund’s liquidity in an effort to pre-empt a wave of redemptions when the fund reopened.
By October, it was announced that the suspended Equity Income fund would be wound down and the former star manager fired from the fund.
He then walked from his remaining two investment vehicles. On that same day, Woodford announced that his investment company Woodford Investment Management would close.
Under the terms of the scheme as approved by the High Court, payments are expected to be made around Easter this year and scheme creditors do not need to take any action to receive them. Further information is available on the scheme’s website.
This follows the announcement on December 14 by Link Fund Solutions that investors had overwhelmingly voted to approve the scheme of arrangement.
The FCA said it considered that the scheme offers investors the quickest and best chance to obtain a better outcome than might be achieved by any other means.
In April 2023, the regulator also announced a conditional settlement of its investigation into the circumstances leading up to the suspension of the WEIF and LFS’s role as the authorised corporate director of the WEIF.
As part of the conditional settlement, LFS agreed to pay all of its assets to more than 250,000 investors in the WEIF, via the scheme.
In addition, Link Group, the ultimate parent of LFS, has voluntarily agreed to contribute up to £60m to bolster the redress.
The FCA said: “This money would not be available to investors through either separate legal action or any other action we, or anyone else, could take.
“The FCA considers the scheme to be the quickest and best way to return as much money to investors as possible compared to other means.”
