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Traders in Neil Woodford’s flagship fund have voted decisively to approve a controversial reimbursement scheme backed by the UK regulator, signalling an finish to the four-year saga triggered by the collapse of the Woodford Fairness Revenue Fund.
Ninety-four per cent of those that voted, together with institutional traders, opted for the “scheme of association” administered by Hyperlink Fund Options and supported by the Monetary Conduct Authority, in accordance with provisional outcomes launched by Hyperlink on Thursday. Greater than 54,000 traders participated within the vote, in accordance with Hyperlink.
The ultimate outcomes can be printed earlier than a court docket listening to on January 18, which Hyperlink hopes will approve the consequence with a purpose to start the method of returning as much as £230mn to traders. Based on the FCA, it will mark the return of a complete 77 per cent of cash that was locked up in 2019.
Hyperlink Fund Options stated the vote “demonstrated [investors’] robust assist for the scheme”.
“This is a vital step for the scheme, and the institution of the settlement fund, which [Link] has all the time believed is the most suitable choice obtainable for traders.” It “materially enhances the quantity of redress obtainable” and offers the quickest route” doable.
Roughly 300,000 traders had some £3.6bn caught within the Woodford Fairness Fund after its suspension in June 2019 in what turned one of many UK’s worst funding scandals. The fund collapsed after a downturn deflated the worth of its public equities, and its illiquid holdings meant it struggled to satisfy investor calls for for redemptions.
The vocal minority of Woodford traders and advocates who campaigned in opposition to the deal reacted with shock on the scale of the vote. Critics alleged that the FCA had misled traders about different — doubtlessly extra profitable — avenues for reimbursement, together with litigation or a declare with the Monetary Providers Compensation Scheme.
“Un-fucking plausible . . . I can’t imagine my eyes,” one investor who voted in opposition to the deal wrote in an e mail.
“It’s such a foul consequence, it’s really good”, stated Andy Agathangelou, head of the Transparency Job Pressure, which campaigns for Woodford traders.
Agathangelou accused the FCA of spreading “misinformation” by equating the scheme to “77p within the pound” for traders, which he stated didn’t embrace any losses sustained earlier than the fund’s suspension, nor did it take inflation into consideration. He additionally claimed many traders discovered it tough to vote.
“It will likely be straightforward to elucidate to the decide that the voting course of was not legit [ . . . ] on the sanction listening to on January 18,” he added. “Recreation on; and we’re up for it”.
The FCA stated: “This redress scheme affords the quickest route for redress for the overwhelming majority of individuals. Payouts by different means similar to litigation or the FSCS should not assured and can probably take longer to realize.”
The vote got here every week after Bob Blackman, a conservative MP, informed the Monetary Instances that he needed to see an inquiry into the dealing with of the Woodford reimbursement course of.
An FCA investigation discovered that Hyperlink made “important errors and errors” in managing the fund’s liquidity, ensuing within the fund failing to have a “affordable and applicable liquidity profile” from September 2018.
Ryan Hughes, interim investments managing director at AJ Bell, stated: “Whereas there’ll little doubt be some that really feel that this scheme doesn’t compensate them sufficiently for his or her losses, others will really feel that getting again round 80 per cent of the fund worth on suspension can be greater than they might have hoped for.”