Yahoo Finance Watchdog probes Northern Trust's role in Woodford collapse
Investigators at the City regulator are examining whether the depositary for Neil Woodford’s flagship fund did its job properly before it collapsed last year.
The investigation into Northern Trust was launched in recent months and follows an ongoing probe into Link Fund Solutions, the supervisor of the Woodford Equity Income Fund.
Hundreds of thousands of ordinary investors were blocked from accessing their money when the fund run by the star stockpicker was suspended 13 months ago because it could not sell its assets quickly enough to meet withdrawal requests.
The fund is now being liquidated and assets are being sold off so that investors can recover some of their losses.
The Northern Trust probe has been ongoing for months, Wealth Manager first reported.
The firm was responsible for ensuring that Link followed City rules. Link, in turn, was supposed to ensure that Mr Woodford complied with regulations for fund managers.
Investigators are likely to examine whether Northern Trust took Link to task over the level of illiquid assets being held by the fund.
The fund’s rules allowed investors to withdraw their money on demand but the proportion of its investments held in private companies rose over time, making it difficult to meet redemption requests.
Questions may also be asked about how the fund valued the shares it held in unlisted companies, which included a slew of British pharmaceutical start-ups.
Investors have been receiving money from the sale of the fund’s assets but have been told the final payment may not arrive until the end of the year.
Lawyers preparing a class action suit against Link on behalf of investors believe their claim could exceed £160m and potentially bankrupt the firm, The Telegraph revealed this month.
The FCA and Northern Trust declined to comment.
