The financial watchdog has provisionally banned former star City fund manager Neil Woodford and fined him and his former fund company almost £46 million for putting investors’ money at risk.
The Financial Conduct Authority (FCA) said it will ban Mr Woodford from holding senior manager roles and managing funds for retail investors.
Campaigners have called for Mr Woodford to forfeit his CBE (Commander of the Order of the British Empire) honour as a result.
It also announced plans to fine him £5.89 million and Woodford Investment Management (WIM) £40 million.
Mr Woodford and WIM have referred the case to the Upper Tribunal to present their case for appeal.
The former manager’s flagship fund, Woodford Equity Income Fund (WEIF), was wound down in 2019 after investors tried to withdraw cash faster than the fund could pay out, amid concerns over its high exposure to illiquid and unquoted shares.
The value of the WEIF had fallen from a high of more than £10.1 billion in May 2017 to £3.6 billion before its suspension.
Around 300,000 investors still had cash trapped in the fund when it was suspended.
On Tuesday, the FCA said it has concluded that Mr Woodford and the fund “made unreasonable and inappropriate investment decisions” between July 2018 and June 2019.
The fund’s sale of liquid assets and acquisition of illiquid ones meant WEIF was unable to meet rules in place at the time, whereby investors should have been able to access their funds within four days.
“WIM and Mr Woodford did not react appropriately as the fund’s value declined, its liquidity worsened and more investors withdrew their money,” the FCA said.
“The FCA has concluded that Mr Woodford held a defective and unreasonably narrow understanding of his responsibilities.”
The regulator said it found that Mr Woodford and his company’s failings “led to a significantly increased risk of the fund being suspended”.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “Being a leader in financial services comes with responsibilities as well as profile. Mr Woodford simply doesn’t accept he had any role in managing the liquidity of the fund.
“The very minimum investors should expect is those managing their money make sensible decisions and take their senior role seriously.
“Neither Neil Woodford nor Woodford Investment Management did so, putting at risk the money people had entrusted them with.”
The Woodford Campaign Group of investors affected by the collapse of WEIF wrote to Sir Chris Wormald, chairman of the Honours Forfeiture Committee, calling for the former fund manager to lose his CBE award.
The letter said: “Neil Woodford should forfeit his CBE because of the terrible harm the Woodford scandal has caused.
“The reason for writing to you today is that we have been previously advised that the Honours Forfeiture Committee will hold back on making a decision regarding the forfeiture of Mr Woodward’s CBE until any regulatory investigation has been completed.
“As such, I believe there is no longer a reason for your Forfeiture Committee to delay making a decision; and given that the Financial Conduct Authority’s judgement is so critical of Mr Woodford, I hope the decision-making process you follow might be both straightforward and swift.”
