A law firm is starting court proceedings this week (June 3) against Link Fund Solutions over the company's handling of the Woodford Equity Income fund.
Harcus Parker is to submit a class action on behalf of 1,500 investors in the fund, suing Link for £18mn.
Daniel Kerrigan, a senior associate at Harcus Parker, told FTAdviser: "Three years on from the suspension of the Woodford Equity Income fund, our clients are disappointed that it has become necessary for them to issue proceedings in order to reclaim their lost investments.
“We are confident, however, that this will mark an important step in their fight for redress.”
Link declined to comment.
The date of submission will be three years to the day that the fund was suspended, locking investors into the vehicle.
Ryan Hughes, head of investment research at AJ Bell, said investors would doubtless feel Link and the FCA could have “done better” over the past three years.
“There is a delicate balance between winding up the fund and getting a fair price for the remaining assets,” he said, adding that after three years he suspected many investors would prefer to draw a line under this and move on.
“Ultimately, the fact that this saga has dragged on for so long has been damaging for the reputation of the whole industry.
“No doubt we will hear the familiar words ‘lessons will be learned’ once the final review is concluded by the FCA, but I suspect that will be of little comfort to the thousands of investors impacted and it will take a long time to regain the trust of these people.”
Second claim
Another law firm, Leigh Day, launched a claim form last year on behalf of 100 of the fund’s investors.
Leigh Day claimed Link was in breach of the rules of the Financial Conduct Authority in the way it monitored and managed the fund, which it said ultimately led to the fund’s collapse.
At the time, Link Fund Solutions said it would “vigorously defend” the case.
Meanwhile, MPs have called for the FCA to conclude swiftly its own investigation into the scandal, after delays.
Woodford: What happened?
The poor performance of Neil Woodford's flagship Equity Income fund meant it had been struggling with outflows which were running at a net £9mn per working day in May 2019.
Then on June 3 Kent County Council asked to withdraw all of the £250mn it had invested with the manager through its pension fund. This triggered the fund's suspension.
Following this Woodford scrambled to sell shares to improve the fund's liquidity in an effort to preempt a wave of redemptions when the fund reopened.
But on October 15 Link Fund Solutions, the authorised corporate director of the fund, announced it would be wind down the fund and it fired Woodford.
Later that day Woodford walked away from his other two investment vehicles and confirmed he had taken the decision to close Woodford Investment Management.
Thousands of investors saw their money trapped in the suspended fund and lose considerable sums as a result.
At its peak the fund was more than £10bn in size but at the point of its suspension, the fund was £3.5bn in size - though it had shrunk to £2.9bn by the time capital started being repaid.
So far £2.5bn has been paid out as the fund gradually sells its holdings, with investors still waiting for £140m to be returned.
sally.hickey@ft.com
