ALEX BRUMMER: Light at the end of the tunnel for Woodford investors
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ALEX BRUMMER: There’s finally some light at the end of the tunnel for long-suffering Woodford investors
Long-term investors in the collapsed Woodford Equity Income Fund can look forward to compensation.
Link Group has come to the view that it is not a viable position to resist the efforts of the Financial Conduct Authority to bring investor justice for Woodford’s bankruptcy.
Link is setting aside £250 million to cover a looming fine. The payment will largely depend on Aussie-owned Link Group being able to sell its offshoot Link Fund Solutions (LFS) to Dublin-based competitor Waystone Group.
Compensation: Link Group has concluded it is not a viable position to resist the FCA’s efforts to achieve justice for investors for Woodford’s failure
LFS had a responsibility to ensure that disgraced investment guru Neil Woodford maintained sufficient liquidity in his main fund to handle investor redemptions.
During the Link watch, Woodford took a series of desperate actions, such as selling unlisted assets to other parts of his empire, in an attempt to bridge cash shortages.
The Woodford scandal is the biggest to hit the UK fund management industry in modern times.
Hundreds of thousands of depositors were directly or indirectly exposed to Woodford through the Hargreaves Lansdown trading platform.
It still recommended Woodford funds on its favorite Wealth List (since deprecated), almost to the bitter end.
A settlement with Link, as welcome as it would be for savers nursing losses, is by no means the end of the saga.
Nearly three years have passed since the FCA, when led by Andrew Bailey (now Governor of the Bank of England) at the request of the Treasury Select Committee, launched an inquiry into the causes of the collapse, responsibility for what happened and the role of the regulator itself.
It has been a hugely complex investigation with 24,000 documents and dozens of witness statements.
The FCA has taken disciplinary action against Link and proposed reforms to fund management practices before finalizing and publishing the Woodford report.
Aside from Link, the FCA has so far taken no formal disciplinary action against any other parties involved in the scandal, including the Guernsey Stock Exchange, depository Northern Trust, broker Hargreaves Lansdown or Neil Woodford himself. The FCA stepped in to prevent Woodford from starting again in Jersey.
Britain prides itself on the fairness of financial justice. But as we’ve learned on HBOS and elsewhere, well-paid city attorneys are adept at plowing the field first.
They are able to hold back enforcers with false claims of privilege and endless Maxwellisation, a process that allows those criticized to legally review material. This unhelpfully hinders investigations and allows individuals to shirk responsibility.
That is not a good sight for the hygiene of the City.
Home help
A clear sign of rumor among listed companies has long been an annual general meeting held on Christmas Eve.
That ensures minimal interference from media or investors, as there are no newspapers on Christmas Day and interested parties have mostly retreated to the bosom of their families.
No such defenses were possible for yesterday’s AGM of ailing social housing company Home REIT. In all respects the result was the same.
Reporters were denied access to the rally in the heart of the Square Mile. Even more troubling, real shareholders, with documented proof of ownership, were rejected for not having proper paperwork, the company claimed.
Those left outside the door haven’t missed too much. Directors blocked because an annual report has yet to be released.
Accountants Alvarez & Marsal have been called in to investigate allegations of misconduct. Activist Viceroy Research, who raised the alarm, says he is now ready to act like a white knight.
This farce shames the whole concept of shareholder democracy.
Culture shock
The reputation of ‘craft’ beer group Brewdog has already been tarnished by allegations of bullying, and the company launched a £9 million scheme to change its culture.
It now plans to expand production of key brands in China. It wants to tap into the largest beer market in the world.
Entering into a strategic partnership with Budweiser in China seems like a gross mistake. It should have given weight to Beijing’s suppression of the Uighurs, the crackdown in Hong Kong and military threats against Taiwan before getting on board.