Net closes in on Woodford
Long suffering investors in the collapsed Woodford Equity Income Fund can start to look forward to some recompense. Link group has come round to the view that resisting the efforts of the Financial Conduct Authority to achieve justice for investors for the Woodford failure is not a viable position.
Link is setting aside £250m to cover a looming penalty. 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.
LFS had responsibility for ensuring that disgraced investment guru neil Woodford maintained sufficient liquidity in his main fund to handle investor redemptions.
It was on the Link watch that Woodford engaged in a series of desperate actions, such as the sale of unquoted assets to other parts of his empire, in an effort to bridge cash shortfalls. The Woodford scandal is the biggest to impact the UK fund management industry in modern times.
Hundreds of thousands of savers were exposed to Woodford directly or indirectly through the Hargreaves Lansdown trading platform. It was still recommending Woodford
funds on its favoured Wealth List (since abolished) almost to the bitter end.
A settlement with Link, as welcome as it would be to savers nursing losses, is by no means the end of the saga. Almost three years have passed since, at the request of the Treasury Select Committee, the FCA, then headed by Andrew Bailey (who has since become governor of the Bank of England) set up a probe into the causes of the collapse, responsibility for what happened and the role of the regulator itself.
It has been an enormously complex inquiry involving 24,000 documents and dozens of witness statements.
The FCA has proceeded with disciplinary action against Link and proposed reforms of fund management practices before finishing and publishing the Woodford report. Beyond Link, the FCA has thus far not taken formal disciplinary steps against other parties caught up in the scandal, including the guernsey Stock Exchange, depository northern Trust, broker Hargreaves Lansdown or neil Woodford himself. The FCA did intervene to stop Woodford starting up all over again in Jersey.
Britain prides itself on the fairness of financial justice. But as we learnt at HBoS and elsewhere, highly paid City lawyers are skilled at ploughing the field first. They are capable of obstructing enforcers with spurious claims of privilege and endless Maxwellisation, a process which allows those criticised to legally review material. This unhelpfully stymies investigations and allows individuals to swerve responsibility.
That is not a good look for the hygiene of the City.
Home help
A SUrE sign of rum goings on at public companies has long been an annual general meeting held on Christmas Eve. That ensures minimum media or investor intrusion as there are no newspapers on Christmas Day, and interested parties mostly will have retreated to the bosom of their families.
no such defences were possible for yesterday’s AgM of distressed social housing outfit Home rEIT. To all intents and purposes the outcome was the same. reporters were barred entry to the meeting held in the heart of the Square Mile. Even more disconcerting was that genuine shareholders, with documented evidence of ownership, were turned away because they didn’t have what the company asserted were the right papers.
Those left outside the doors did not miss too much. Directors stonewalled on the grounds that an annual report is still to be released. Accountants Alvarez & Marsal have been brought in to probe allegations of wrong doing. Activist Viceroy research, which set off alarms, now says it might be willing to act as a white knight.
This farce shames the whole concept of shareholder democracy.
Culture shock
THE reputation of ‘craft’ beer concern Brewdog already has been stained by allegations of bullying, and the company launched a £9m plan to change its culture. It is now planning to expand production of key brands in China. It wants to tap into the world’s biggest beer market.
Forming a strategic partnership with Budweiser in China looks to be a crass error. It should have given weight to Beijing’s oppression of the Uyghurs, the crackdown in Hong Kong and military threats against Taiwan before hopping aboard.