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Aussie Link faces $57m fine in Woodford investigation; The takeover of the DND threatened

Signage for the FCA (Financial Conduct Authority), Britain’s financial regulator, is seen at its headquarters in London, Britain March 10, 2022. REUTERS/Toby Melville/File Photo

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  • Potential FCA fine following £306m compensation
  • Potential fine cast doubt on Dye & Durham-Link takeover
  • Shares down as much as 5.2%, trading at 14% off takeover bid

Sep 21 (Reuters) – Australia’s Link (LNK.AX) administration said on Wednesday that Britain’s financial regulator could impose a 50 million pound ($56.86 million) fine on the company’s UK unit, in addition to a potential £306.1million compensation for his stewardship of a now-defunct fund. .

The potential payment of the fine and compensation cast doubt on the share registry company’s nine-month takeover talks with Canada’s Dye & Durham (DND) (DND.TO), which has already cut its offer one-fifth of an agreed price of A$1.95 billion ($1.30 billion). Read more

“It’s going from bad to worse for Link. Link’s announcement today makes it clear that he now faces a liability of A$605 million,” DND communications manager Wojtek Dabrowski told Reuters. , in an email response.

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“Given what’s been disclosed in Link’s latest financials, it’s unclear how they’re going to pay for this.”

Link shares fell 5.2% to A$3.26, hitting their lowest level since June 16 and trading at a 14.4% discount to the last 3 takeover bid, AU$81 each.

Growing hurdles to the Link-DND takeover underscore the growing problem of execution risk in Australian M&As in a year marked by equity market fluctuations and an intransigent regulatory approach. Read more

The British company Link Fund Solutions Ltd (LFSL), which managed the LF Woodford Equity Income Fund (WEIF), is under investigation by the British Financial Conduct Authority (FCA) for the collapse of the fund in June 2019. Read more

The FCA said on Wednesday that Link had 14 days to say whether he would challenge his proposed fine before an independent panel, or resolve the matter by agreement and thus obtain a postponement.

The FCA said its reparations figure did not reflect any amounts that may be due to anyone, including fund members, as a result of potential wrongdoing by other parties.

“The remedy determined by the FCA is based on misconduct rather than losses caused by fluctuations in the market value or price of investments,” the watchdog said.

Link said Wednesday that he had made no commitment to fund or financially support LFSL, and considered any liability related to the investigation to be limited to the fund manager. (https://bit.ly/3LuHyvH)

LFSL was the authorized corporate manager of the £3.7billion WEIF, which closed in October 2019, and whose assets were selected by veteran star manager Neil Woodford.

Woodford has been criticized by lawmakers and investors for holding a large number of illiquid assets, making it difficult to meet buyout calls after months of underperformance.

($1 = 0.8794 pounds)

($1 = 1.4961 Australian dollars)

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Reporting by Sameer Manekar and Navya Mittal in Bengaluru, additional reporting by Huw Jones in London; Editing by Shailesh Kuber, Subhranshu Sahu and Ana Nicolaci da Costa

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