- Registered Woodford Equity Income fund investors to vote on mooted payout
- But some argue the sum is not enough and investors should reject the deal
Neil Woodford was once one of the most popular stock pickers in the UK
Investors in the collapsed Woodford Equity Income fund have until 5pm today to register to vote on a controversial £230million compensation package.
Some 300,000 investors have been left nursing losses for four years after the cash-strapped fund was suspended and ultimately collapsed in 2019, leading to the demise of Neil Woodford’s once-multi-billion-pound investment business.
Registered investors will cast a vote on 13 December to approve or reject the compensation scheme, which if approved will see up to £200million paid out in the first quarter of 2024.
In order to pass the package will require the approval of 50 per cent of investors by number and 75 per cent by value.
Should the package be voted through it will effectively block class actions launched by various law firms against the once-£10billion fund’s administrator Link, and possibly those against other connected parties.
Potentially in the firing line for lawsuits, for example, is Hargreaves Lansdown, which promoted the Woodford fund until the day dealings in its shares were suspended.
Should investors back the deal?
Neil Woodford was once among the UK’s most famous and popular stock pickers, with billions of pounds from institutions and individuals flowing into his funds when he started his own business.
The collapse of the Woodford Equity Income fund occurred when a run of poor performance led to investors pulling cash out in large volumes, which the fund was unable to service without selling off assets on the cheap.
This ultimately led to Link’s decision to suspend the fund, which never recovered and was forced to close.
The affair led to fierce criticism of Woodford, Link, platforms advertising the fund and the Financial Conduct Authority (FCA), the latter of which has been forced to reassess rules after facing scrutiny in Parliament.
The FCA announced the scale of the compensation package in April, but many critics have argued the £230million sum is unfair to investors.
Some experts suggest investors are entitled to closer to £1billion in compensation.
Many also argue that Woodford, Link and the regulator have not been held sufficiently accountable for the fund’s downfall.
The FCA has said it considers the scheme the ‘quickest and best chance to obtain a better outcome’ for investors.