Island Exchange Tied to Woodford Stood Up by U.K. Watchdog

(Bloomberg) -- The Guernsey stock exchange says it was stood up by the U.K. regulator when trying to share information on some of the holdings in Neil Woodford’s flagship fund.

The “Financial Conduct Authority failed to show up,” the exchange said in a statement dated July 4 and published by the U.K.’s Treasury Committee on Tuesday. “Eventually, without explanation, an FCA PA called to suggest reorganisation.”

An FCA spokesman said the Guernsey exchange’s account is “a mischaracterization of what happened, involving a misunderstanding between all parties on conference-call details.” A spokesman for the Guernsey-based International Stock Exchange, or TISE, didn’t immediately comment further.

The exchange previously outlined concerns to the U.K. regulator about the valuation of certain assets in Woodford’s flagship fund, days after the manager suspended investor redemptions. Woodford had some of the stocks listed in Guernsey, reducing the amount of unlisted holdings in the fund.

Under European rules, Woodford’s fund could only hold 10% of its assets in rarely traded securities. Woodford temporarily breached that limit twice in early 2018, according to the FCA. The listing of some of companies in which the LF Woodford Equity Income Fund owned shares on the exchange helped it to stay within the rules. On June 18, the watchdog said it was investigating events that led to the freeze.

TISE first got in touch with the FCA in April when the exchange suspended trading in the stocks listed on the island, according to the statement to the select committee. The communication log shows that TISE was concerned about valuation of the stocks and that it later lifted the suspensions.

A spokesman for Woodford said that the firm wasn’t directly involved in the listing process, which was instead managed by the companies that were listed and their corporate sponsor.

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