ShareSoc: Woodford delay suggests ‘serious and complex arguments’ being considered

Decision on sanctioning scheme of arrangement postponed until early February



ShareSoc has suggested that the delay in approving the Woodford scheme of arrangement could be due to “serious and complex” arguments raised during last weeks hearing.

At the hearing, held over two days on 18 and 19 January, Justice Richards delayed making a decision on sanctioning the proposed redress scheme until early February.

In an update on ShareSoc’s website, a spokesperson said: “Schemes of arrangement are normally relatively straightforward with judgement announced on the day. The delay suggests that, at the very least, some serious and complex arguments were raised during the Hearing, which the judge needs to carefully consider.

“Given the sums of money involved, the numbers of investors affected, and the importance of the legal issues and potential precedents involved, the judge is aware that appeals may follow.”

According to ShareSoc, Justice Richards “appeared to recognise” the point it raised at the hearing, that the £183m–£230m compensation is “clearly inadequate” relative to the £298m harm that the FCA has identified in relation to the failure to suspend WEIF in the period Nov 2018 to June 2019.

During the hearing, the Transparency Taskforce argued that the law cannot allow a scheme to remove individual investors’ FSCS protections or their right to refer cases to the Financial Ombudsman Service – a point contested by Link Fund Solution’s barristers.

“This is a complex and contentious legal matter on which Justice Richards will no doubt clarify his view in his judgement,” ShareSoc said.

“Many objectors complained that the Scheme document and associated process were unfair, presenting a one-sided view and failing to clearly lay out the relevant alternatives. They argued that the biased documentation and process were misleading to investors.

“We now await judgement and any subsequent news from the FCA. It would be highly unusual for a Scheme of Arrangement vote to be overridden by the court, particularly where the vote in favour was 93% (90% of individual investors).”