Regulator not aware of new Woodford fund in Cayman

Fallen UK fund manager seeks comeback

When Caymanian Amanda Roberts read last week in British media reports that disgraced fund manager Neil Woodford was setting up a new fund in the Cayman Islands, she was upset.

Her father, who died in Sept. 2018, had invested a portion of his savings with Woodford’s LF Equity Income Fund, which imploded amid losses and investor redemption requests in 2019.

“I am very cross that Woodford plans to set up shop here and don’t think he should get away with it,” Roberts told the Cayman Compass earlier this week.

“We were lucky in that it wasn’t the whole of Dad’s investments, but it is galling and upsetting nevertheless, particularly as Woodford had the means to repay more to investors but chose not to.”

Roberts and her brother, as executors of their father’s estate, received two small payments from the liquidation of the fund with the expectation of more. “But nothing more came,” she said.

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It is estimated that 300,000 people, most of them small retail investors, lost money with Woodford’s fund that at its peak had more than GBP10 billion (US$13 billion) in assets under management.

Woodford told the Sunday Telegraph earlier this year he was “very sorry” for “two years of underperformance” of the fund. But he blamed most losses on the suspension and liquidation of the fund, saying these “decisions were incredibly damaging to investors and they were not mine”.

Woodford’s new UK investment management company, WCM Partners, announced in February that it was working with Acacia Research, a publicly-traded investment company based in Irvine, California, to advise on Acacia’s portfolio of life sciences companies.

These stocks were previously owned by LF Woodford Equity Income Fund, and the portfolio was eventually sold by Link Fund Solutions Limited to Acacia in June 2020.

“The assets will form the cornerstone of a new strategy to rebuild the Woodford investment operation under the WCM Partners brand, serving institutional and high net worth investors,” the company said.

Woodford, who is the chief investment officer of WCM Partners, subsequently suggested he would set up a fund in Jersey.

This prompted the Crown Dependency’s financial regulator to comment that Woodford had yet to apply for a license, but would not be allowed to use the island as a “back door” to restart his career.

Speaking to the Financial Times, the director general of Jersey’s Financial Services Commission, Martin Moloney, said: “Anyone who gets off the plane thinking that Jersey is a soft touch has wasted the price of the ticket. Jersey is not the place to come if you are trying to get around UK regulation, or any other regulation for that matter.”

Portfolio Adviser then reported on 23 April that it had seen a document sent by WCM Partners to prospective investors to promote the WCM Partners Healthcare Portfolio to discern investor interest and whether to bring such a fund to market.

The document listed WCM Partners Healthcare (GP) Ltd at an address in the Cayman Islands, with Woodford and fellow fund manager Gavin Petken as the investment team.

However, the Cayman Islands Monetary Authority, the regulator of funds, confirmed on Thursday 29 April, that “there is no current or pending registration with the Authority in reference to Mr. Neil Woodford”.

Asked whether the authority would allow such a registration, given that an investigation by the UK’s Financial Conduct Authority into the collapse of Woodford’s previous fund appears to be ongoing, CIMA cited Cayman’s private funds legislation.

“Section 7 of the Private Funds Act outlines the basis on which the Authority may refuse to register a private fund, which includes investigations by other competent authorities,” CIMA said, adding that it could not comment further.

Roberts said it would be “foolish” for Cayman to undo all the hard work that had been undertaken to improve its financial standing by allowing Woodford to register a new fund on island.

It would be “hearty grist for the global media mill, returning Cayman to a murky financial reputation in an instant”, she said.

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