Hyperlink Group ‘doubtless’ to face £300mn penalty over Woodford fund collapse

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The Monetary Conduct Authority has tipped its hand on the result of its investigation into the collapse of the fund run by Neil Woodford, saying it’s “doubtless” to demand that Hyperlink Group pay as much as £300mn over its function within the scandal.

The UK monetary regulator has been investigating the demise of the previous star stockpicker’s flagship fund. Hyperlink, which was the fund’s administrator, froze the fund in June 2019, trapping £3.7bn of buyers’ funds.

Savers who misplaced cash via the fiasco, in addition to the UK funds business, have been keenly awaiting the FCA’s report on the Woodford affair, which the regulator had stated could be accomplished by the tip of final 12 months however which has not but been printed.

“The FCA has investigated the circumstances resulting in the suspension of the [Woodford Fund] and is prone to search to require [Link] to pay a monetary penalty and/or client redress,” the regulator stated in an announcement late on Monday, including that it could require Hyperlink to pay as much as £306mn.

The regulator has disclosed its present pondering on the result of the continued investigation following Toronto-based software program group Dye & Durham’s takeover bid for Hyperlink — a deal that requires the FCA’s approval. The FCA stated on Monday it will approve the deal on the situation that the businesses dedicated to cowl an eventual penalty or fee to shoppers.

Dye & Durham stated it was “assessing the influence” of the circumstances. Hyperlink declined to remark.

The regulator stated Hyperlink might problem any demand for a payout, and that “a number of events” had been nonetheless below investigation.

The Woodford Fairness Earnings Fund got here below strain in 2019 because it struggled to fulfill buyers’ calls for for redemption from its portfolio, which was partly tied up in personal corporations’ shares that had been arduous to promote. The FCA stated Hyperlink’s legal responsibility associated to “failings in managing the liquidity” of the fund as its administrator.

Hyperlink has returned £2.54bn to buyers from the sale of property within the frozen fund. It has stated the remaining property is probably not offered till 2023 or past.

The FCA has not stated when it expects to publish the outcomes of its investigation. Chief government Nikhil Rathi stated in a letter to the Treasury choose committee final December that “all key proof has been gathered” however the watchdog wanted extra time to resolve what motion to take.

Hyperlink additionally faces a brewing class-action lawsuit on behalf of buyers. Legislation companies Leigh Day and Harcus Parker are getting ready claims that might run to tons of of thousands and thousands of kilos, arguing that buyers are due compensation as a result of Hyperlink didn’t oversee the fund correctly, resulting in its collapse.

Hyperlink has denied these claims.

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