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The UK Financial Conduct Authority has been withdrawn Increasingly divided activist campaign Targeting seven investment funds with increasing concerns about the interests of individual investors.
The Financial Conduct Authority (FCA) has contacted the largest retail investment sites through their contacts with clients of seven investment funds targeted by US activist hedge fund Saba Capital, according to people familiar with the situation. The regulator wants to ensure that shareholders are aware of upcoming votes on board membership of trusts.
Officials from the Financial Conduct Authority asked Hargreaves Lansdown, Interactive Investor and AJ Bell how to alert customers who own shares in investment funds on their platforms, according to people familiar with the communications.
Managed by Saba Activist investor Boaz WeinsteinHe called on shareholders to vote to oust the trust's boards, claiming that the boards had failed to hold investment managers accountable for poor performance.
The crackdown could lead to one of the biggest changes in Britain's 150-year-old investment funds industry, which manages £266bn of assets.
I have Saba It proposed candidates for its board of directors She aims to eventually take over investment management of the trusts, currently managed by Baillie Gifford, Janus Henderson, Herald Investment Management and Manulife.
However, the investment fund industry has raised concerns that retail investors may not turn out to vote, paving the way for Saba to take over. Saba holds stakes ranging from 19 per cent to 29 per cent in each of the trusts, with a total value of £1.5 billion. Saba needs more than 50 percent of the votes in favor in each box to win.
The financial watchdog is closely monitoring the situation and remains in close contact with investment platforms that handle communications with investors in investment funds, according to a person familiar with the matter.
However, the rules governing voting to remove and appoint investment fund managers are set by the Corporations Act, not by the FCA's regulations, so the watchdog has decided that these are currently internal matters of the trusts, their boards, investors and the person. He added.
The Association of Investment Companies, the sector's trade body, has written to the Financial Conduct Authority (FCA) raising concerns about protecting shareholders' interests.
“With so much at stake, the regulator cannot rely solely on people doing the right thing,” said Richard Stone, chief executive of the AIC. “When significant changes are proposed to an investment fund, platforms should actively contact their clients to encourage voting.”
Stone called on the FSA to review how it determines board independence under its listing rules. He said that Saba's campaign to control the boards of directors of the two investment funds and also to become a manager of their assets raised a potential conflict of interest.
The seven trusts targeted by Saba are Baillie Gifford US Growth; Edinburgh Global Investment; Keystone Positive Change; European small companies; Henderson chances; Herald Investments; and growth and income of natural resources in CQS.
Hargreaves Lansdown and AJ Bell said they had written to shareholders of the trusts encouraging them to vote. Interactive Investor said it has also taken steps to enable customers to vote. The Financial Supervision Authority declined to comment.
