Lawyers are examining possible claims against Link Fund Solutions for its role as authorised corporate director of the now-defunct Woodford Equity Income fund.
Law firm Nelsons announced today (June 5) that “significant questions” had emerged about the role of Link in the ultimate closure of Neil Woodford’s flagship fund, despite the fact Link has previously maintained it had acted “in accordance with applicable rules and in the best interests of all investors” at all times.
Nelsons has already probed enquiries from investors who are interested in pursuing action against investment platform Hargreaves Lansdown, but said that issues surrounding Link had arisen during these investigations.
Cathryn Selby, head of Nelsons’ dispute resolution team, said: “As the authorised corporate director, Link Fund Solutions had a fiduciary role and a regulatory obligation to ensure that the Woodford Equity Income fund was run in the best interests of investors, ensuring they were protected and treated fairly.
“It was required to adhere to the Financial Conduct Authority’s principles of business, and the rules set out in the collective investments schemes sourcebook of the FCA handbook.”
Ms Selby pointed to the fact Mr Woodford had listed a number of unquoted companies in the portfolio on the Guernsey stock exchange, which had allowed him to maintain unquoted holdings above the 10 per cent limit.
She added that Link had been involved in the decision to designate the Guernsey international stock exchange as an eligible market for these purposes.
Ms Selby said: “We are looking at whether such decisions were indeed in the best interests of all investors, or whether it could be said that investors were let down by Link’s apparent failure to address the substantive issue of the increasing illiquidity of the fund at a much earlier stage.”
Investors have been unable to withdraw their cash from the fund since it was suspended on June 3 last year. It had been struggling with a sustained period of outflows and was unable to meet the requested redemptions.
On October 15, Mr Woodford was fired from the fund before walking away from his two remaining investment vehicles. By the end of the day, he had announced his investment firm Woodford Investment Management would close. Over the past year, the fund has lost 37 per cent.
Just today Link announced it had agreed a sale over 50 per cent of the fund’s remaining assets, but the update showed the net asset value of the fund had tumbled since it was last valued in May.
Ms Selby said: “People are now beginning to see the real extent of their losses, and with the current state of the economy due to the coronavirus pandemic we’re in the midst of, the outlook for those investors is looking worse and worse as time goes on.”
Link did not want to comment.
imogen.tew@ft.com
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