Guernsey stock market cuts Woodford ties

NEIL Woodford has been dealt another blow as the Channel Islands stock exchange moved to sever ties with the fund manager.

Woodford controversially listed stakes in four privately-owned companies on Guernsey-based The International Stock Exchange (TISE) earlier this year.

The highly unusual move was designed to dodge rules aimed at protecting investors, which state that only 10pc of a fund can be invested in private companies.

But three of the companies – Industrial Heat, Ombu and Benevolent AI – have now left the exchange after they were told to delist or face ejection. TISE wanted to wash its hands of Woodford to protect its reputation after the fund manager stopped savers withdrawing their cash from his flagship Equity Income fund.

In a further blow for Woodford, the removal of the three firms means that the Equity Income fund has now breached the rules that put a limit on unquoted stocks.

Woodford Investment Management said: ‘Following the inadvertent passive breach, action to bring the fund back into compliance is already under way.’ Woodford’s flagship Equity Income fund was frozen in June, locking savers’ money inside, as it became unable to sell its assets fast enough to give investors their money back.

Woodford expects the fund to remain suspended until December, by which time the firm will have bagged around £12m in fees which it has refused to waive.

Woodford, 59, is also facing scrutiny from the board of his separate Patient Capital Trust, who may fire him as manager. A stake in another of his companies, Ibiza property business Sabina Estates, is still listed on TISE. Woodford’s listing of the four raised eyebrows because, although it appeared to satisfy the rules on unquoted stocks by putting them on a public exchange, it didn’t make them easier to sell.

None of the stocks were traded in the months that they were listed.

TISE suspended Industrial Heat, Benevolent AI and Ombu from the Guernsey exchange earlier this year, after media reports suggested Woodford was exploring a loophole in investor protection rules.

It also referred its worries to the Financial Conduct Authority.