U.K. Regulator Probes Corporate Directors After Woodford Scandal

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(Bloomberg) -- The U.K. Financial Conduct Authority has formally launched a probe into authorized corporate directors, the Financial Times reported, as the fallout continues from the collapse of Neil Woodford’s flagship investment fund.

The directors, known as ACDs, seek to ensure funds abide by rules and serve investors’ best interests -- but they have faced scrutiny after the downfall of one of the U.K.’s best-known stock pickers. Critics argue that ACDs face conflicts of interest if they are paid by investment managers while also serving their clients.

The regulator is concerned with the relationship between the directors and investment managers, the Financial Times reported. Inquiries have started earlier than some in the industry expected, according to the report.

Woodford started veering more into unlisted and smaller quoted equities after he set up his own firm in 2014. When performance faltered and clients started to pull out, he was forced to freeze his LF Woodford Equity Income Fund because he couldn’t meet redemptions.

In mid-October, he was ousted as manager of his flagship fund and announced he would shutter his investment firm.

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