FCA opens investigation into Woodford Investment Fund
The British financial markets regulator has opened a formal investigation into the events that led up to the suspension of Neil Woodford’s equity income fund earlier this month.
The UK Financial Conduct Authority (FCA) has opened an official investigation into the evnts surrounding the suspension of the LF Woodford Equity Income Fund (WEIF) that occurred earlier this month.
‘We have opened an investigation but cannot comment any further,’ FCA CEO Andrew Bailey said in an open letter to senior British lawmaker Nicky Morgan.
FCA questions Woodford’s investment in illiquid firms
Woodford Investment’s WEIF fund was suspended on June 3 after a spike in redemption requests as investors looked to get their money back.
The FCA has said that it plans to investigate why Woodford invested in illiquid companies on an exchange based in Guernsey, with the fund having a 10% cap on investing in illiquid assets.
In the open letter, Bailey said that the FCA has reached out to Link Fund Solutions, which is the authorised fund manager of the WEIF, in relation to ‘liquidity risks’ from the fund.
‘In February and March 2018, the FCA engaged with Link in connection with two breaches of the 10% limit on the maximum proportion of unlisted securities held within WEIF,’ Bailey said.
‘Following our engagement, these breaches were each notified to us as resolved within a timeframe we had agreed with Link,’ he added.
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