Andrew Bailey, chief executive of the Financial Conduct Authority (FCA) has accused Woodford fund managers of the suspended fund that they were “using the rules to the full.”
He has called for an overhaul of “flawed” European Union regulations and believes the fund was “sailing close to the wind” and potentially used EU rule loopholes.
He said to the Treasury Select Committee he believes it is also a failure of the EU rules, which should have uncovered issues with the fund sooner.
He further said that to MPs that the fund’s manager Link Fund Solutions, and Woodford Investment Management “were not required to tell us of the bundling up of illiquid unlisted investments, which were then listed in Guernsey.
Adding, “It’s a flaw in the UCITS (Undertakings for Collective Investment in Transferable Securities) rules.”
Bailey also said, he does not believe the suspended Woodford fund followed the rules for how many tradeable, or liquid, shares it held, due to listing some of his holdings on the Guernsey stock exchange.
He said, “Listing something on an exchange where trading doesn’t happen, as far as I can see, doesn’t actually count as liquidity.”