Banking

Woodford move proves: Shame has no geographical boundaries

Neil Woodford has registered businesses in London, the Cayman Islands and Delaware, and posited an operation from Jersey but regulators and the industry are keeping a close eye on the former star manager’s moves as the Financial Conduct Authority’s (FCA) investigation continues.

Cayman Finance, the island’s industry trade body, said it could not comment on individual cases but “generally, anyone working in financial services in the Cayman Islands is required to follow Caymanian law, which includes the global standards the jurisdiction has adopted”.

“We have full confidence in the determination of the Cayman Islands Government and the Cayman Islands Monetary Authority to ensure compliance with those laws,” a spokesperson told Investment Week.

Adrian Lowcock, independent commentator and former head of personal investing at Willis Owen, said Woodford should wait until the watchdog finishes its investigation before returning to investment management.  

“It does not seem right that this is going on while the FCA investigation continues, it would be more respectful to investors to wait until all of this has been completed before returning to investment management,” he said.

“The fact that each time he has tried to resurface there has been a backlash in the UK shows that most investors are not keen for Woodford to return.”

The FCA kicked off the probe in June 2019, shortly after the collapse of Woodford Investment Management’s Equity Income fund, which sparked the demise of Woodford’s investment business. It has warned investors not to expect answers on this before year end.

For campaigner Gina Miller, Woodford’s return shows that “shame appears to have no geographical boundaries and such actions show arrogance that damages the entire industry.”

Law firm Leigh Day is urging the FCA to take a robust approach when it does ultimately close its investigation and reveal its findings, including disciplinary measures against Woodford.

“If the FCA does this, it could make it considerably more difficult for Woodford’s new venture to get off the ground,” Meriel Hodgson-Teall, associate solicitor at Leigh Day, said.

Woodford is yet to apply for authorisation to run money from any location. 

The FCA said it remains in “close supervisory contact” with the business and will continue to engage with authorities in overseas jurisdictions about any potential future activities of the firm or its principals.

The Jersey regulator asserted the island would not be a “back door” to access the UK market.

As investors wait for answers, some say delays are just feeding the fear that it will all be swept under the rug.

“Investors like to have certainty and would benefit from this being cleared up as soon as possible to reinstate their faith in financial services,” Lowcock said.

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