Link share

UK watchdog’s Woodford fund fix could derail $1.7bn Link-Dye and Durham takeover

Join now for FREE unlimited access to Reuters.com

  • British watchdog eyes $358million repair
  • Link Fund Solutions managed now collapsed Woodford Equity Income Fund
  • Dye & Durham buys Link Administration for $1.7 billion
  • DND in active discussion with Link regarding Woodford repair

LONDON, Sept 12 (Reuters) – Link Fund Solutions, which managed the bankrupt LF Woodford Equity Income Fund, could be forced to pay up to 306 million pounds ($358 million) in damages, the Financial Conduct said on Monday. British authority.

The FCA was reacting to news that Dye and Durham (DND.TO) was offering to take over LFS and six other companies from Australian stock registration firm Link Group (LNK.AX), all cleared by the watchdog British finance.

Dye & Durham (DND.TO) and Link received approval from Australia’s competition regulator for the takeover last week, ending a nine-month acquisition saga that has seen several rival bids and bidders collide. dispute Link’s stake in the online real estate settlement company. PEXA Group (PXA.AX). Read more

Join now for FREE unlimited access to Reuters.com

The planned takeover forced the FCA to inform the market of its lengthy investigation into WEIF’s collapse in June 2019, which left more than 300,000 investors at a loss.

LFS was the authorized corporate manager of the 3.7 billion WEIF, which was eventually shut down in October 2019, and whose assets were selected by veteran star manager Neil Woodford.

“The FCA has investigated the circumstances leading to the suspension of the WEIF and will likely seek to require the LFS to pay a fine and/or redress for consumers,” the FCA said.

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.

“This proposed remedy reflects the FCA’s current view of LFS’ failures in managing WEIF liquidity,” the regulator added.

Link Group, in a statement to the Australian Stock Exchange, said LFS “does not agree with the FCA’s view” and will explore all options, including challenging any notice of warning that may be issued by the Regulatory Rulings Committee.

“Link Group has made no commitment to fund or financially support LFS,” the Sydney-based company said. “Link Group considers that any liability relating to Woodford’s business will be limited to LFS.”

Dye & Durham said Monday evening it was assessing the impact of the proposed condition on the proposed takeover of Link Group, and was in active discussions with Link to resolve the issue. (https://bit.ly/3eJ0LO5)

The Canadian software company has received change of control approval from the FCA for six of the seven UK regulated entities owned by Link Group, it added.

The FCA has approved the acquisition of LFS by D&D, subject to a commitment to make up any shortfall within LFS in the amount available to cover any repair payments.

No other conditions were imposed on LFS or the six other companies taken over by D&D, the FCA said.

The watchdog said it could not provide further information as its investigation into the circumstances surrounding WEIF’s suspension continues, but it will provide an update as soon as possible.

The FCA told lawmakers in January that it was close to making a decision on whether to take enforcement action regarding WEIF’s suspension in June 2019. read more

($1 = 0.8546 pounds)

Join now for FREE unlimited access to Reuters.com

Reporting by Huw Jones and Sameer Manekar; Editing by Jonathan Oatis and Lisa Shumaker

Our standards: The Thomson Reuters Trust Principles.