Savers still locked out of Woodford fund as he cashes in £1m shares

FUND manager Neil Woodford sparked further anger last night after cashing in £1million of shares just as his investors were warned they face being denied access to their money until December.

It was announced yesterday that Mr Woodford, 59, was a ‘reluctant seller’ of shares in his Woodford Patient Capital Trust to settle personal liabilities, including a tax bill.

But hours later, investors with money in the separate Woodford Equity Income fund were told a block on withdrawals was likely to be extended to December. Savers were barred from taking their money out of this fund two months ago after Mr Woodford ran out of ready cash to pay customers who wanted their investments back.

Although savers cannot access their nest eggs, Mr Woodford is still charging fees totalling almost £100,000 every working day. His company is on course to rake in almost £12million before the doors are reopened.

Baroness Altmann, a former pensions minister, said: ‘This situation is a disgrace. I just can’t believe that a fund manager of his long standing is unable to see the distress he is causing. People invested in what they thought was a firstclass fund, their money has basically been taken away from them... and to add insult to injury they’re still being charged fees.

‘And then Mr Woodford is suddenly able to get £1million without a problem. It just seems dramatically unfair.’

Mr Woodford sold 1.75million shares in Patient Capital, 60 per cent of his holding with a value of around £ 1million, between July 3 and 8. He told the trust’s board only on Saturday, three weeks later.

Investors including Mr Woodford can still buy and sell shares in Patient Capital.

He has a separate holding in Equity Income, which he will be unable to sell until it reopens. Mr Woodford refused to go into detail about the tax bill he sold the shares to pay.

His problems began when he pumped billions of pounds of savers’ cash into risky investments that were hard to sell in a hurry. At the start of June, he was hit with a demand by customer Kent County Council to repay £263million but was unable to sell enough shares.

Equity Income was forced to block withdrawals and start a massive sell-off.

Link Fund Solutions, an independent company tasked with making sure Equity Income follows the rules, has now told investors this suspension is likely to last until early December for Mr Woodford to complete ‘a measured and orderly repositioning of the fund’s portfolio of assets’.

In a defiant update on his website, Mr Woodford apologised but insisted he will be proved right. He said his investing strategy is based on a view that the world economy is heading for the rocks.

‘Admittedly, this strategy has not delivered the returns we had anticipated over the past couple of years,’ he said.

‘I understand the frustration, inconvenience and anxiety the continued suspension of the fund will be causing.’

NEIL Woodford is a fund manager without shame. The former pin-up of the stock picking industry has been all but invisible since he was required to shut-up shop at his flagship Woodford Equity Income Fund in early June. That closure has been extended until December.

It is a cruel blow which separates savers from their money while Woodford disgracefully will collect another £12m in fee income.

Another outrage is that the financier, who together with a colleague has extracted a shade under £100m in dividends from the fund management group since it was founded, has raised £1m through share sales at the quoted Woodford Patient Capital Trust.

Woodford’s excuse for selling is that he has a tax bill to meet. It is mighty curious that someone who has grown so wealthy on the back of investors could not pay his taxes without delivering another jolt to hapless shareholders in Patient Capital.

The normal behaviour of a cornerstone investor in a company experiencing difficulties is to demonstrate confidence by buying more shares. Woodford has done precisely the opposite, selling 1.75m shares in a trust which has seen its value plummet by 30pc in a few months. He has piled on the misery as the shares dropped a further 3pc.

In many ways Woodford is an extremely lucky fellow. If regulators at the Financial Conduct Authority and the Bank of England showed more grit, he would be out on his ear and replaced with one of the great and the good from another City firm.

By delaying forceful action and allowing Woodford to stagger on, they risk contagion of the kind seen in the financial crisis.

One of the most disturbing aspects of the whole Woodford affair has been watching the self-indulgence of those involved.

Mark Dampier, the Hargreaves Lansdown (HL) cheerleader for Woodford, sold shares alongside his family in the broker to the value of £5m days before the scandal erupted. Stephen Lansdown, one of HL founders, sold £130m worth of stock, as the scale of the troubles at Woodford emerged.

The board of the Patient Capital Trust headed by Susan Searle has been as feeble as the regulators. As chairman Searle tamely allowed the Equity Income fund to dump assets in Patient Capital as Woodford struggled to increase liquidity.

Patient Capital let it be known it was looking to replace Woodford as manager of the fund and is still pledging to do so.

It should have acted far more decisively to bring another manager in, as St James Place did just days after events unfolded.

Even now Searle and her fellow directors are making excuses, describing Woodford as a ‘reluctant seller’.

Investors in the Equity Income Fund should be so lucky as to be able to free up their cash.

Everything about this affair, including alleged conflicts of interest at Link Asset Services, the authorised corporate director monitoring rules, is malodorous.

Decisive action is needed.

London calling

Finally, a London Stock Exchange deal that can be supported. The LSE’s little known chief executive David Schwimmer, a refugee from Goldman Sachs, is seeking to agree a £22bn takeover of information provider Refinitiv, the main rival to Bloomberg.

The deal is complex and will load the LSE with debt. But it will finally give the LSE the strategy it has lacked over the decades as it has been besieged by potential buyers.

If completed, the transaction opens up fantastic new opportunities in financial data, reduces dependence on the UK equities and indexes and bolsters exposure to bond and foreign exchange trades.

The transaction also adds to the LSE’s exposure to the rest of the world, fitting into the ‘global’ Britain image as Boris Johnson’s government dashes towards Brexit.

Should Schwimmer be successful, it will keep overseas boarders, such as the new york Stock Exchange owner ICE, at bay.

Investors showed support marking LSE shares up 15pc. That rarely happens to the stock of the buyer.

Exit strategy

Simon Fox doesn’t believe in hanging around when his time is up.

He rapidly resigned from HMV before it ran into difficulty.

Having delivered robust results he is leaving Mirror and Express owners Reach on August 16 after a seven year stretch.

He is to be replaced by former Ladbrokes boss Jim Mullen.

How efficient.