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Link Solutions to be fined £50m over doomed Woodford flagship fund

Frozen: Link - the company responsible for overseeing Woodford's management of its funds - decided to suspend the £3.7bn Woodford Equity Income Fund in 2019

Link Solutions will be fined £50m for convicted Woodford flagship fund in addition to a £306m bill for victims

The company that oversaw Neil Woodford’s doomed flagship fund is set to be fined £50million by city regulators.

Link Fund Solutions faces a fine in addition to an order to return up to £306million in reparations to victims.

The fine, imposed by the Financial Conduct Authority (FCA), is the latest sign that a long-running investigation into the collapse of Woodford’s investment empire may be coming to an end.

Frozen: Link - the company responsible for overseeing Woodford's management of its funds - decided to suspend the £3.7bn Woodford Equity Income Fund in 2019

Frozen: Link – the company responsible for overseeing Woodford’s management of its funds – decided to suspend the £3.7bn Woodford Equity Income Fund in 2019

More than 300,000 savers who entrusted money to the stock-picker have been waiting for answers since they were unable to access it in 2019.

The first hint that Link would be penalized came last week.

Dye & Durham, a Canadian company which planned to buy Link’s parent company – Link Group – has revealed that FCA demands for a repair program have thrown a spanner in the works.

The FCA confirmed it was ‘likely’ to force Link to pay ‘up to £306m’ to the victims, and added yesterday that a £50m fine would also be forthcoming.

Link has 14 days to respond to the draft warning notice. He could challenge the fine or agree to settle the case. Link said he would “explore all options”.

Dzmitry Lipski, head of fund research at Interactive Investor, said: “The drip, drip, drip of information is a curious way to conduct a major investigation after three years of silence.

“Many questions remain unanswered, the issue of redress is far from certain and wider investigations are still ongoing.”

He said investors deserved better than a potential deal.

Hundreds of thousands of savers were left out when Link, the company responsible for overseeing Woodford’s management of its funds, decided to suspend the £3.7bn Woodford Equity Income fund in 2019 and eventually shut down, after a flood of investors tried to squeeze their money, following a series of poor performances.

Woodford invested in risky early-stage, unlisted stocks, and was unable to sell them quickly enough to return the money.

When Link realized the extent of the problem, he decided to close the fund, sell the shares and return the money to the investors.

But several sales have been made at a knockdown price, and savers have lost around £1billion since the fund was frozen.

Link also faces legal action from RGL Management, Leigh Day and Harcus Parker – acting on behalf of savers.

Although the FCA’s reparations program does not cover investors’ losses, lawyers hope to extract more money from Link through the courts.

The FCA said “several parties” other than Link were still under investigation. He was thought to be looking at Woodford, 62, a senior executive, Hargreaves Lansdown, the investment platform that recommended the fund until it was suspended, and Northern Trust, the depositary responsible for keeping tabs on Link.

Ryan Hughes, head of investment partnerships at AJ Bell, said: “Investors are increasingly hopeful that this sad episode is about to end.”

“Investors waited patiently for the FCA to find out what was wrong and put some form of compensation in place.

“Now it looks like they might finally be getting somewhere.”

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