By Kirstin Ridley
LONDON (Reuters) -Thousands of investors in a collapsed fund run by former star stock picker Neil Woodford have overwhelmingly backed a proposed redress scheme of up to 230 million pounds ($290 million), the fund's authorised corporate director said on Thursday.
Link Fund Solutions (LFS) said around 93.7% of investors who voted for the scheme, representing 96.1% of the value, had approved a proposal that the Financial Conduct Authority (FCA) has encouraged bruised investors to consider.
"This is an important step for the scheme..., which LFS has always believed is the best option available for investors as it materially enhances the amount of redress available from LFS and provides the fastest route for redress possible," LSF said.
The Woodford Equity Income Fund (WEIF), which once managed more than 10 billion pounds, was suspended in 2019, trapping 300,000 investors and sparking an FCA inquiry and three investor lawsuits against LFS and one against Hargreaves Lansdown (LON:HRGV), the investment platform that promoted the fund.
Hargreaves declined to comment.
LFS said more than 54,000 attended a scheme meeting in person or by proxy to vote for a proposal designed to settle its liabilities.
The FCA, which has been criticised by some retail investors for endorsing a settlement that blocks them from statutory redress routes, said it would continue to engage with parties as the scheme heads for final approval in court on Jan. 18.
"We welcome the investors' vote as an important milestone," a spokesperson said.
If the scheme is approved in court next month, LFS expects to make an initial payment of between 183.5 million and 200 million pounds in the first quarter of 2024.
"LET BATTLE COMMENCE"
The settlement proposal, which LFS says includes all available assets, falls well short of the 1.0 billion pound-plus redress mooted by some investors and claimant law firms.
The Woodford Campaign Group, a retail investor group that argues the scheme is unfair and inadequate, said it would continue to lay out its objections in court next month.
"Game on; and we're up for it. Let battle commence," said Andy Agathangelou, the group's co-founder.
Woodford, once one of Britain's most high-profile fund managers, was sacked after over-sized bets on hard-to-sell illiquid assets left him struggling to meet redemption requests following months of underperformance.
The FCA has said LFS made "critical mistakes and errors" in how it oversaw WEIF's liquidity risk management and controls. But it also advised investors to accept the redress scheme, rather than face lengthy and costly court battles.
The regulator has said LFS's scheme does not reflect compensation that might be owed by others over potential wrongdoing, adding that "multiple parties" remain under investigation over events that led to the WEIF suspension.
The RGL Group, the only claimant investor group to also sue Hargreaves over the scandal, promptly urged all WEIF investors who invested via the platform to join its action group.
"Now that the scheme result appears likely, subject to any upheld substantive challenge at the sanction hearing, the RGL Group intends to press on with the claims against the FTSE-100 platform provider," it stated.
($1 = 0.7956 pounds)