Former City minister Lord Myners slammed the financial regulator for failing to act on signs that Neil Woodford’s flagship fund was in trouble.
Myners said the Financial Conduct Authority “should have been awake” to issues at the Woodford Equity Income Fund.
The former star trader’s fund was suspended this week following a surge in investor redemptions.
“Unfortunately he [Woodford] had a performance record in playing cricket and then he decided to play baseball,” Myers told the BBC.
“He moved away from investing in very liquid securities into illiquid and private companies.
“Woodford was obliged to begin to do clever dealings to try and stay within the word of the law.
“The FCA said it didn’t know things were happening – they were in the news papers. The FCA should have been awake.”
Shares in Woodford’s listed fund, the Woodford Patient Capital Trust, have dropped 3.88 per cent this morning.
Hargreaves Lansdown directors netted more than £6m after selling the firm’s shares just weeks before its stock price tumbled. The fund supermarket’s share price fell 16 per cent this weeks due to its connection to Woodford’s funds.
The company’s research director Mark Dampier, his wife Annette Dampier, and chief investment officer Lee Gardhouse sold shares worth £6.1m last month, according to reports.
The stock has fallen 22 per cent since the trio sold their shares in May saving them more than £1m, the Daily Mail reported.
Hargreaves Lansdown only removed Woodford’s fund from its Wealth 50 list of recommended funds, which was overseen by Dampier, following the freeze.
Meanwhile, Woodford has been criticised for refusing to waive the fund’s fees while it is suspended.