In April 2024, the Financial Conduct Authority (FCA) issued a Final Notice against Link Fund Solutions Limited (Link) for failing to manage the LF Woodford Equity Income Fund (WEIF) properly, resulting in significant investor losses. The FCA found that Link did not act with due skill and care in its role as the fund’s Authorised Corporate Director (ACD), allowing liquidity issues to go unaddressed, ultimately suspending the fund in June 2019.
Link has agreed to a restitution scheme totaling up to £230 million, funded by Link and its parent company, Link Administration Holdings Limited (LAHL). This settlement will benefit current unitholders of WEIF who were disadvantaged when the fund was suspended. The FCA’s investigation revealed Link’s failure to maintain appropriate liquidity, treat investors fairly, and manage redemption requests properly, which significantly contributed to the fund’s suspension and investor losses.
Key Takeaways:
- Failure in Liquidity Management: Link failed to maintain a reasonable liquidity profile for the fund, increasing the risk of liquidity issues and making it difficult to meet redemption requests.
- Restitution for Investors: The FCA required Link to implement a £230 million restitution scheme, largely funded by LAHL, to compensate affected investors.
- Suspension of the Fund: In June 2019, Link suspended WEIF after Kent County Council requested full redemption, which Link could not meet due to the fund’s poor liquidity.
The FCA’s action underscores the importance of proper fund management and the need for ACDs to prioritize investor protection through effective risk and liquidity management.
For more details, see the FCA’s Final Notice (link-fund-solutions-lim…).
About Michael Rasmussen
Michael Rasmussen is the founder of United Atlantic Legal Services. He is a licensed attorney in Florida and registered solicitor in the United Kingdom. Michael has acted as General Counsel and Chief Compliance Officer to several investment advisers, including private fund managers, responsible for the management of billions of dollars in client assets.
Michael is also the founder of FinProLaw, an online learning platform where Michael has created courses designed for investment adviser compliance professionals. These courses include:
- Investment Adviser Compliance Essential for Chief Compliance Officers
- Foundations of Investment Adviser Compliance
- What is a “Security”?
- Investment Adviser Marketing Rule
- Regulation A – Exemption from Registration
- Regulation Crowdfunding – Exemption from Registration
- Regulation D – Exemption from Registration
Michael can also be found on LinkedIn.
Investment adviser firms who are also clients of United Atlantic Legal Services can receive many of these courses at a significantly reduced fee or, in some cases, at no expense. Contact us today or visit the FinProLaw to learn more.