.png)
3 hours ago
5
The UK financial regulator is taking legal action against the former investment star Neil Woodford for allegedly offering unauthorised investment advice online, months after announcing plans to ban him from the City.
The Financial Conduct Authority said it was seeking an injunction against Woodford and W4.0, a United Arab Emirates-registered company, to stop them carrying out “potentially unlawful activities”.
“The Financial Conduct Authority (FCA) has started civil proceedings against Mr Neil Woodford and W4.0,” the regulator said in a short statement on Monday afternoon. “The FCA alleges that Mr Woodford and W4.0 are providing regulated investment advice and making financial promotions through the subscription-based platform, www.w4pz.com, without authorisation.”
It comes a year after the FCA announced it would ban Woodford from holding senior manager roles and managing funds for retail investors in the UK as a result of the collapse of his popular equity fund in 2019.
Woodford’s equity fund was worth more than £10bn at its peak, but suffered from several poorly performing investments in companies including the estate agent Purplebricks, the finance company Burford Capital and the doorstep lender Provident Financial. That string of bad bets, combined with Woodford’s decision to put money in a number of private unlisted companies that were harder to sell, led to the fund’s suspension and eventual collapse in 2019.
Woodford resigned in mid-October 2019 and subsequently closed his investment company. Administrators later wound down the fund and returned money to many of its 30,000 investors at a steep loss.
The FCA finally issued its decision last summer, banning Woodford from the City and finding him and and his investment company a total of £46m.
In a damning report outlining Woodford’s alleged management failures, the FCA said at the time: “Mr Woodford is not a fit and proper person to perform regulated activities associated with managing open-ended funds and any senior management or significant influence function on the basis of his lack of competence, capability and reputation.”
Both Woodford and his investment management company said they planned to challenge the FCA’s fine and financial services ban in the upper tribunal, though a date has not yet been set for the hearing.
Woodford Investment Management last year said it “strongly disagree[d]” with the financial watchdog’s findings, and said the blame sat with the Link Fund Solutions , the company in charge of the fund’s liquidity, referring to how easily it should be able to sell off its holdings for cash. The regulator found last year that Link “failed to act with due skill, care and diligence in its management”.
The FCA’s penalties and ban will not formally apply until after the hearing takes place, and will rely on the upper tribunal siding with the regulator. However, Woodford would still need to apply for fresh authorisation for any new senior roles.
In the meantime, Woodford appears to have charged ahead with a subscription-based investment service called W4.0 that would allow investors to download and enact his strategies via their own accounts.
Woodford wrote on his blog last year:“Because we’re not bound by the constraints of fund launches or minimum sizes, I can share more strategies, more ideas, and more updates than would ever be possible in a traditional fund structure.”
“W4.0 is like having Neil Woodford by your side,” the marketing materials said.
According to the City watchdog, the parent company of W4.0, W Four Point Zero FZE LLC, is registered in the United Arab Emirates.
When asked by Investment Week last August whether it had any concerns about Woodford’s online venture after its decision, the FCA said it was “engaging with Mr Woodford to satisfy ourselves that his activities do not require our authorisation”.
If he does, “he’d need to apply to us or risk breaking the law”, the regulator explained. The FCA added: “We’d take our decision to ban into account when considering any application for authorisation.”
The Guardian was not able to immediately reach Woodford for comment.
