It’s been more than a year and-a-half since the Woodford Equity Income fund, run by the former “star” fund manager Neil Woodford, was suspended.
Since then, investors in the fund, now called the LF Equity Income fund, have endured a frustrating time, with little apparent progress being made towards securing compensation for those affected.
Finally, though, things seem to be happening rather more quickly. So here are some of the questions investors want answering.
I’m an investor in the fund. When can I expect some more money back?
Link Fund Solutions, the administrators of the LF Equity Income fund, announced earlier this month that investors will share a payment of nearly £100 million in mid-December (in other words, any day now). This is the fourth payment since the fund closed. So you should be receiving some money very shortly, but it may take a little longer for those who invested in the fund through platforms like Hargreaves Lansdown.
Will I still be owed money after this latest payment?
Yes, but it’s by no means certain that you’ll receive it. Link says it will keep investors informed about “a fifth payment”, but it can’t say when that might happen or how much investors can expect to be paid. Also, note the word possible.
So how long will the wind-down of the fund drag on for?
It’s hard to say how long it will take for the remaining assets in the fund to be sold. Link has warned that because of their illiquid nature, it’s unlikely that some of the unquoted shares held in the fund will be sold before mid- to late-2021.
When will we start seeing cases on behalf of Woodford investors being brought to court?
Very soon. The commercial litigation specialist Harcus Parker is putting the finishing touches to a claim against Link Fund Solutions, and it’s hoped a claim will be filed in court in the next few weeks.
What exactly is Link alleged to have done wrong?
Link was the Authorised Corporate Director (or ACD) of Woodford Equity Income. As such it had a fiduciary responsibility to investors in the fund. The fact that it’s taking so long for the fund’s assets to be sold calls into question whether they were suitable for inclusion in the first place and whether investors received value for their money. Link also failed to ensure that investors could redeem their shares on request.
Is it too late for me to join the Harcus Parker claim?
No. If you hold, or used to hold, shares in the fund directly, or via an intermediary, you are eligible to apply. You simply need to go to WoodfordClaim.com and fill in your details. Harcus Parker says you could be entitled to 40-50% of the value of your investment as compensation, and the firm is acting on a no-win, no-fee basis.
Is there a case for biding my time and seeing whether this first action is successful?
It’s hard to predict the outcome of actions such as these. Harcus Parker says investors have a strong case, and of course there’s no fee to pay if the action fails. However, if the case were to settle, or if the court were to make an award for damages, only those who have signed up as a claimant would benefit. Also, it’s usual in these sorts of cases for the terms of settlement to be confidential, so they wouldn’t help other investors in a follow-on claim.
What about Hargreaves Lansdown? A large proportion of Woodford investors were clients of the platform. Does HL have a case to answer too?
Indeed it does, and there are at least four firms that are considering actions against Hargreaves Lansdown. They are RGL, Nelsons, Slater & Gordon and Leigh Day. Of course, there’s nothing stopping investors claiming compensation from both Link and HL if they want to.
Aren’t we supposed to be hearing from the Financial Conduct Authority about its investigation into the Woodford scandal?
Indeed we are. The FCA was asked for an update on its Woodford investigation by Treasury select committee chairman Mel Stride in a letter last month. The FCA’s chief executive Nikhil Rathi responded by saying that the inquiry is “making good progress” but it is “not appropriate to speculate” on what direction it will take. Nor would he be drawn on when we can expect a report on the findings.
The Woodford Equity Income story was all over the newspapers last year, but it’s received much less attention in 2020. Why is that?
Unfortunately, that is the nature of news. Thankfully, though, there are still a few publications that continue to cover it — notably The Times and Sunday Times, and the Daily Mail and Mail on Sunday.There are also two books on Woodford coming out in the new year, which should generate more publicity. The first is When the Fund Stops by David Ricketts. Publisher Harriman House has announced a release date of 26th January. The second book, Built on a Lie by FT Journalist Owen Walker, is due to be released by Penguin on 4th March.