Neil Woodford's debt evasion of a £46m penalty is speculated by financial expert Jeff Prestridge.
Neil Woodford and his company, Woodford Investment Management (WIM), have launched an appeal against the fines and ban imposed by the Financial Conduct Authority (FCA) following the collapse of the Woodford Equity Income Fund. The FCA had slapped a total of £46 million in fines on Woodford and WIM, with £5.9 million levied on Woodford personally and £40 million on the company [1][3].
The appeal process is underway, but it is expected to take several years before a hearing date is assigned, due to a backlog at the Upper Tribunal and a reported three-year wait for tribunal hearings [1]. The central dispute revolves around legal arguments about responsibility for monitoring the fund's liquidity. Woodford argues that the authorised corporate director, Link, was responsible, while the FCA maintains that Woodford himself had personal supervisory duties over liquidity issues [3].
Woodford Investment Management has remained silent on its ability to pay the fines if the appeal fails [1]. The legal proceedings are anticipated to have wider implications for fund management regulation and compliance frameworks in the UK [3][4].
The FCA's actions stem from the collapse of the Woodford Equity Income Fund, which was hastened by its suspension in June 2019 due to the fund's portfolio being filled with illiquid stocks [2]. At the end of December 2014, 30% of Woodford Equity Income's portfolio was in illiquid assets, compared to 5% for the Invesco Perpetual High Income fund that Woodford previously managed [2].
Critics, including long-term critic Miller, question why no action was taken about the illiquid portfolio of Woodford Equity Income from day one [2]. Miller also points out that there are numerous small cap UK funds currently operating with highly illiquid portfolios [2].
The strategy used by Woodford in managing the fund deviated from the expectations of investors, as the portfolio was skewed towards smaller, illiquid stocks [2]. Neil Woodford, once hailed as the UK's answer to Warren Buffett, is yet to be punished for his role in the collapse of his flagship fund, Woodford Equity Income [2].
Many former Woodford investors feel let down as they have waited a long time for him to be punished financially. The FCA's £5.9 million personal fine on Neil Woodford might not be fully paid due to Woodford's financial situation [2]. The fines and a ban on Mr. Woodford from running retail investment funds in the future have been imposed, but he has appealed against the decision [2].
If the judge sides with Woodford, the fines and ban could be quashed [2]. The appeal will be heard in the Tax and Chancery Chamber of the Upper Tribunal, which deals with appeals against enforcement decisions made by financial regulators [2].
In a separate development, Neil Woodford has put his Salcombe bolthole on the market for £10 million [5]. The timing of the property sale is noteworthy, given the ongoing legal proceedings and the financial implications they may have.
[1] The Guardian: "Woodford Investment Management appeals against FCA fines and ban over collapsed fund" [2] BBC News: "Neil Woodford faces £5.9m fine over collapsed fund" [3] The Telegraph: "Neil Woodford's £46m FCA fine: What's it all about?" [4] Financial Times: "Neil Woodford's appeal against FCA fine and ban to go ahead" [5] The Daily Mail: "Neil Woodford puts £10m Salcombe bolthole up for sale"
- Neil Woodford's legal battle over the fines and ban imposed by the Financial Conduct Authority (FCA) could have far-reaching implications for the UK's fund management regulation and compliance frameworks.
- A central point of contention in the Woodford Investment Management (WIM) appeal is the responsibility for monitoring the fund's liquidity, with Woodford arguing that the authorized corporate director, Link, should be held accountable, while the FCA insists that Woodford himself had personal supervisory duties.
- With the appeal process underway, there are concerns about WIM's ability to pay the heavy fines if the appeal fails, resulting in financial consequences for Woodford himself.
- Aside from the legal proceedings, Neil Woodford has listed his Salcombe property for sale for £10 million, prompting questions about the timing of the sale and its potential impact on his financial situation amidst the ongoing legal battles.
