BREAKING: FCA bans Neil Woodford and fines him £46 million which will turn out to be just £6 million: vindication for his nemesis, Tom Winnifrith but crime still pays

Panorama and others recognized that my 1000 articles, videos and podcasts from 2015 exposed disgraced fund manager Neil Woodford while the deadwood press, led by the FT and by Jeff Prestridge et al at the Mail on Sunday, blew smoke up his arse almost to the point of when his funds were gated in June 2019. In fact Woodford himself singled me out as his nemesis among journalists back in 2019. Today the FCA has banned Woodford from fund management and levied huge fines but crime really has paid for the disgraced money man

Woodford is appealing the ruling but the FCA has fined Mr Woodford 5,888,800 and banned him from holding senior manager roles and managing funds for retail investors. The FCA has also fined Woodford Investment Management £40,000,000 – Neil owns 65% of WIM with his business partner Criag Newman owning the rest.

While the sums are large, that appears that between 2013 and 2019 Woodford & Newman generated profits, dividends and salaries of approaching £100 million and thus, even after tax, they will after the fines are paid still have been made multi multi millionaires for their efforts. How on earth can that be justified? Surely the fines should be so large that they wipe out 100% of takings so meaning that crime does not pay and serving as a real deterrent.

Neil Woodford should be ruined financially as were so many of his victims. He has not been.

Who among you would not agree to public humiliation and a life ban from your chosen career in return for an eight figure sum?

The FCA says Mr. Woodford and WIM ran The Equity Income Fund and were responsible for managing the liquidity of the fund, so that investors could redeem their investments and be repaid.

“The fund was suspended in June 2019, leaving investors – a significant majority of whom were ordinary retail customers – unable to access their money. The value of the WEIF had fallen from a high of over £10.1bn in May 2017 to just £3.6bn in the run-up to its suspension.
The FCA has concluded that between July 2018 and June 2019 WIM and Mr Woodford made unreasonable and inappropriate investment decisions. They disproportionately sold more liquid investments (those that are easier to sell) and bought less liquid ones over this period. This meant that at the time of suspension only 8% of the investments held by WEIF could be sold within 7 days. Under rules in place at the time, investors should have been able to access their funds within 4 days.

WIM and Mr Woodford did not react appropriately as the fund’s value declined, its liquidity worsened and more investors withdrew their money. This disadvantaged investors who remained in the fund, compared to those who had withdrawn their investment before the fund was suspended.”

Well up to a point. This website demonstrated countless times that well before 2018 Woodford was making very dubious decisions, hiding the lack of liquidity in his fund with strange asset swaps at bogus prices with his own investment trust which was not facing redemptions or with bogus listings. And also investing small amounts at artificially high prices to mark up the value of large investments made at lower levels in companies that were patently duff.

We are told “ The FCA has concluded that Mr Woodford held a defective and unreasonably narrow understanding of his responsibilities. Despite his senior role, he did not accept that he had a responsibility to oversee the management of the fund’s liquidity, including in interviews conducted by the FCA. He also failed to provide proper oversight of WIM’s relationship with Link Fund Solutions (Link), the WEIF’s authorised corporate director, including after Link raised concerns about the fund’s liquidity.The FCA considers Mr Woodford’s and WIM’s failings led to a significantly increased risk of the fund being suspended.”

That is putting it mildly. One of my happiest memories of 2019 was, just a few weeks before the gating, Mr. Woodford telling attendees at the WPCT AGM that rumours of his funds difficulties were just down to bad journalism and that the worst offender was Tom Winnifrith. I was singled out by the man himself as his nemesis!

I challenged him and the board to cite one example of this but he could not and the wretched board of the great and the good slapped brave Neil on the back for standing up to an obvious bounder and scoundrel, the disgraced Sheriff. The board of WPCT were then and are now considered respectable good citizens. And I am not. Make of that what you will.

Some will see the FCA ruling after six years as a victory for proper regulation. I see it is a failure. The FCA ignored my very public warnings about Woodford until it was too late. It has dragged its heels for six long years and now it levies fines which will still see Woodford drowning in money for the rest of his life.

What sort of deterrent is that?

Indeed as a reader PL points out, though WIM was once drowning in cash, Woodford and Newman have long since exricated that. WIM now has a negative net worth so certainly doesn’t have £40 million spare. There is no joint and several liability on the penalties. So I assume that WIM will shortly go into insolvent liquidation, but maybe they’ll wait until the Upper Tribunal hears the appeal and probably confirms the penalties.  In other words Neil and Craig took out c£100 million and now pay fines of £6 million. Its just a small cost of crime

You can read our complete coverage of Woodford going back to 2015 HERE