FCA bans star investor Neil Woodford and issues fine of nearly £46m

The stockpicker put investors’ money at risk, says watchdog

The Financial Conduct Authority has provisionally banned a former star City fund manager and fined him and his former company almost £46 million.

The financial watchdog said Neil Woodford put investors’ money at risk.

It said it will ban Mr Woodford from holding senior manager roles and from managing funds for retail investors.

Mr Woodford will be fined £5.89 million and Woodford Investment Management (WIM) will be fined £40 million.

Mr Woodford and WIM have referred the case to the Upper Tribunal for appeal.

The former manager’s flagship fund, Woodford Equity Income Fund (WEIF), was wound down in 2019 after investors tried to withdraw cash faster than the fund could pay out, amid concerns over its high exposure to illiquid and unquoted shares.

The value of the WEIF had fallen from a high of more than £10.1 billion in May 2017 to £3.6 billion before its suspension.

About 300,000 investors still had cash trapped in the fund when it was suspended.

Neil Woodford has been provisionally banned (Woodford Investment Management)

On Tuesday, the FCA said it had concluded that Mr Woodford and the fund “made unreasonable and inappropriate investment decisions” between July 2018 and June 2019.

The fund’s sale of liquid assets and acquisition of illiquid ones meant WEIF was unable to meet rules in place at the time, whereby investors should have been able to access their funds within four days.

“WIM and Mr Woodford did not react appropriately as the fund’s value declined, its liquidity worsened and more investors withdrew their money,” the FCA said.

“The FCA has concluded that Mr Woodford held a defective and unreasonably narrow understanding of his responsibilities.”

The regulator said it found that Mr Woodford and his company’s failings “led to a significantly increased risk of the fund being suspended”.

Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “Being a leader in financial services comes with responsibilities as well as profile. Mr Woodford simply doesn’t accept he had any role in managing the liquidity of the fund.

“The very minimum investors should expect is those managing their money make sensible decisions and take their senior role seriously.

“Neither Neil Woodford nor Woodford Investment Management did so, putting at risk the money people had entrusted them with.”