Neil Woodford suspended dealing in his £3.75bn Woodford Equity Income fund on June 3 for 28 days amid liquidity concerns after the Kent County Council pension fund informed Woodford Investment Management that it was withdrawing £255m.
Since then Mr Woodford has been working hard to sell shares to find the money for any redemptions for when the fund reopens.
But in the past two weeks both MPs and the regulator have waded into the debate about the events leading up to the suspension.
Today (June 18), Andrew Bailey, chief executive of the FCA, wrote a letter to Nicky Morgan, the chairwoman of the Treasury committee, confirming that the regulator had opened an investigation into the Woodford debacle, after increasing its supervision of the fund in February last year.
This came in response to Ms Morgan's letter to the FCA asking for a timeline of the FCA’s supervisory contact with the fund or management; and a timeline of the FCA’s supervisory contact with the authorities in Guernsey, in relation to the fund.
Mr Bailey revealed the regulator had been in contact with Link Fund Solutions, which is the ‘authorised fund manager’, since February last year regarding issues related to liquidity.
In particular it found that on two occasions in February and March 2018, the fund had breached the 10 per cent limit on the maximum proportion of unlisted securities it is allowed to hold.
"Following our engagement, these breaches were each notified to us as resolved within a timeframe we had agreed with Link," Mr Bailey stated.
From April to December 2018, the FCA then held monthly monitoring discussions with Link in relation to the deteriorating liquidity position within WEIF.
Following this engagement, Link revised its liquidity risk management measures to seek to ensure it could meet redemptions on demand and no further breaches of the 10 per cent limit were notified, Mr Bailey wrote.
He added the fund became less liquid between June 2018 and April 2019. However, it did not breach any internal thresholds during this period and was able to meet redemptions throughout.
The FCA had also been notified of the fund's intention to switch shares between Woodford's Patient Capital
and WEIF in February this year.
During its assessment it then became aware of certain securities being listed on The International Stock Exchange (TISE) in Guernsey, after which it met Link to discuss its management of the WEIF, "which particularly focused on issues related to the fund’s exposure to illiquid assets, including those reported to be listed on TISE".
From April 24 the FCA received daily reports of all flows into and out of WEIF.