That are involved, it is, yeah, very serious. As hundreds of thousands count the cost of the woodford scandal. Mr woodford . . We confront the man himself. What do you say, sir, to the people who trusted you, put money in your fund and now they cant reach it . Its all about guessing which way the financial wind is blowing. In the city, fortunes are made and lost on predicting which direction things are heading. For many of us, whether we like it or not, our Financial Security is tied to the ups and downs of the stock exchange. Now, that means we depend on those who manage our cash getting it right more than they get it wrong. The government changed the rules to give people the freedom to invest their pensions wherever they like. So, hundreds of thousands are getting more involved in this high risk game. Beryl is a retired secretary from harrow. Now, she wanted to make her savings go further, so she invested in a fund that was recommended by a friend. The Interest Rates started to drop and drop and i had a girlfriend who only had £10,000 in there, i think, but she actually doubled her money and took one lot out and bought a car. And i thought, my god, im losing out here somewhere, and invested my first £10,000, which started to grow quite quickly. I used to work over there. Did you . That was the factory where i used to work, yeah, from when i was 16. Geoff is also hoping to make some extra cash for his retirement. Hes a stock market investor from the factory floor. Ive always made sure ive got enough money accessible for the things that i need day to day, month to month, that sort of thing. It is the pension. It is money that im going to need when i do retire from work. Beryl and geoff are part of that new wave of investors, those taking their own risks on the stock market. And beryl and geoff both went with the same punt britains most famous fund manager, Neil Woodford. Were in a very momentum driven stock market. So many of us are in an industry that requires performance to be delivered continually. My friend was fully in awe with him. She said to me one day, oh, hes going on his own, you know . I said, who . She said, this Neil Woodford. So, i came home and i did some research on the computer and ijust read a lot of background information, how he had the midas touch. If you want hands on, someone who knows what theyre doing he was the one who had a good reputation. Fund managers buy and sell shares to make money for their investors. Neil woodford earned his reputation running one of the uks biggest funds. He was so successful, he became known as the rock star of fund management. Even big City Investors struggled to get time with him. For a long time during my career, you couldnt actually get access to him. I remember we were looking, actually, to invest £250 million and we were told that, no, Neil Woodford would not be able to come to a meeting for £250 million because it wasnt enough. Here was a man who seemed to know which way things were moving. Five years ago, he set up his own fund, looking for cash from large investors and the likes of beryl and geoff. £10 billion poured in. Even some in the know couldnt resist. Alex brummer has been the city editor of the daily mail for 20 years. I reached an age where i was able to cash in part of my pension and reinvest it, reinvest it myself, and as somebody who feels, who writes about the city every day, ifelt, you know, i could make these decisions. But woodford was one which i went to straightaway. His reputation went before him. I liked his style because hed been so wise, and, i always thought, often on the side of the gods. But not everyone was convinced. You see often Star Fund Managers with big names can set up their own firms because they have the reputation and people will follow them. A lot of people were surprised that so many vulnerable pensioners were exposed to woodfords product before it had been properly researched. Radio friday 13th, bad luck for some. Well, bad luck, ithink, for Neil Woodford. Some thought Neil Woodford was out of his depth. If you want to keep up to date on woodfords growing problems, this isnt going to end well for neil. Tom winnifrith is a former fund manager himself, who writes and broadcasts from his home in the welsh borders. Hes been investigating the woodford for years. Most Fund Managers, they earn a very good living by merely matching the overall market. So, theyre not very brilliant. You get people who do things a bit different and they can be heroes one year, but they can be zeroes the other year. Neil woodford was a hero for most of his career but he has changed his investment approach and what worked for him back in 2000 is not what hes been doing since he set up on his own. Neil woodford had made his name by investing in relatively safe shares and big companies. Now he was on his own, Neil Woodford changed his winning formula. He based himself in oxford. Many of his investments are nearby, cutting edge companies, and that makes them a risky bet. This here is a Company Called 0xford nanopore technologies. Now, theyre trying to come up with machines that will sequence our dna. This is sensyne health. Now, theyre a Technology Company and they are trying to use Artificial Intelligence to develop and to discover new drugs. So, this companys called immunocore and theyre trying to find a cure for skin cancer, which is obviously amazing, but its a high risk investment. Critics say Neil Woodford has been taken in by high tech and its promise to disrupt conventional business. Neil is very keen on companies that say theyre going to disrupt the world of washing machines, drinking water, wooden pallets, disrupt the world of seeking cures for cancer, disrupt anything. However much cash youre going to guzzle over the next few years, however much youre going to pay yourself, use the word disruptive and then neil will go for it. Theres nothing wrong with risky investments if people understand the chances they are taking. But beryl had signed up on a website. She didnt really take the risks on board. This is where i looked when i was looking for a platform. All very glossy, isnt it . Yes, it is, yes. How to get started with investing. I know, yeah, yeah, yeah. The website also lets beryl see how her money is doing. Whats happened today . Ive lost another £330, i think. Today . I think yesterday it was at £24,690. Today, its at £24,398. It started at £30. . £35. How does that make you feel, just to see it slip like that . Well, if you can bleep this out, it makes me feel bleep off. Neil woodfords new fund has been a disaster. Its lost billions. Its cost me tens of thousands of pounds at the moment. Youre investing your money in one of britains leading Fund Managers, somebody with such a stellar reputation. You wouldnt think youre gambling. Neil woodfords fund was suspended by the administrators injune because there wasnt enough cash to pay investors back. Its notjust high rollers that could be affected by Neil Woodfords fund. Here in kent, tens of thousands of workers dont know what will happen to their money. The final straw for the fund was when Kent County Council tried and failed to take its money back. £260 million of pension cash. These are the pensions of 135,000 members. These are employees and ex employees of Kent County Council itself, of other kent councils, of schools, police, fire service. And these are not on the whole wealthy people, are they, who will depend on these pensions . Absolutely, yes. These are, at the end of the day, hard working people who need a pension at the end of their employment. Back then, Neil Woodford said the funds suspension would give him time to raise cash. But across the uk, more than 300,000 small investors have their money trapped. As difficult a decision as this is, and clearly frustrating for you, our investors, we felt that this was necessary to protect your interests. This decision was motivated by your interests, our investors. When it is appropriate, we will open the fund so that you can buy and sell as normal. This is Neil Woodford, Neil Woodford cbe for his services to the financial industry, his involvement in that market. So, you can accept underperformance, but for a fund to get suspended, it was surprising. To protect investors, funds like Neil Woodfords are meant to keep 90 of their investments in shares that can be sold quickly, if needed. But he didnt do that. So, when a lot of investors wanted their money out, Neil Woodford couldnt deliver. So, how can this happen . In this high stakes game, who is protecting the investors . Well, that is supposed to be the Financial Conduct Authority. But the system didnt work. The point about the suspension is, in fact, at the point it was imposed, it was the right thing to do. Its a measure to protect investors, not to penalise investors. But they didnt know, the investors didnt know, and now they cant get their cash and they say it doesnt feel much like protection. The point about the suspension is, in fact, at the point it was imposed, it was the right thing to do. Its a measure to protect investors, not to penalise investors. But they didnt know, the investors didnt know, and now they cant get their cash and they say it doesnt feel much like protection. Youre right, at the moment. And some people, thats biting on more acutely than others. But these are long term investments. Does that mean that the rules that are in place now, today, they are not really protecting small investors . They go some way to protecting some investors. I think its. Partial protections not great, is it . No, it isnt. We have to be careful. Are you saying to me today that you think the rules need tightening . I think the rules need changing, yes. The fca knew more than a year ago that Neil Woodfords fund had too many ha rd to sell investments, but it didnt warn investors. Theyve begun a full investigation into what went wrong. The public had no idea any of this was going on, so it was all being done behind closed doors. How do the Financial Conduct Authority come out of this . They come out of this terribly. I think that they should have sacked woodford. They should have called him in and said, youre unfit to run this fund any longer, we dont trust you to sort it out on your own. But theyve just let him carry on. What do you think about the way youve been protected . Well, i havent been protected at all, have i . What we found is a world where some Fund Managers seem to be able to do as they please. We only get to see glimpses of their gambles, so we decided to look more closely at those who pull the strings. We found another fund manager breaking rules designed to protect investors. His name is mark denning. I feel were in a growth starved world and people will be paying big premiums for growth, so im trying to find companies that are perhaps somewhat misunderstood. Hes worked at one of the biggest Investment Companies in the world for 36 years. Advert what does the word partner really mean . Someone i can trust. Whos with me for the long term. Capital group manages almost 2 trillion of assets. With Capital Group, i can. Mr denning has been helping to manage more than 300 billion of investors money. Thats made him one of the worlds leading Fund Managers. Over time, adjusting the portfolio is a little bit like a sailing captain at the tiller. And he should know. This is him on his vintage yacht. Wahey he also has luxury homes around the world. Weve seen leaked documents that suggest hes been up to no good. There are rules to prevent Fund Managers investing in the same companies as their funds, and its to prevent them profiting at their investors expense. But our documents suggest that mr denning hasnt been taking these rules too seriously. Take Eros International a bollywood film company. We are moving to the land of opportunity. Mark dennings fund at Capital Group invested. What do you do . Im a doctor. And our documents suggest he had secret investments in it as well. And it wasnt a one off. We think the same thing happened with a medical research Company Called mesoblast. We also think he had a secret investment in hummingbird resources. Its a Gold Mining Company set up by his son in law. Explosions. Capital group put in £6 million. It wasnt from a fund run by mark denning, but it looks like another co nflict of i nterest because of the family connection. There is a clear concern around mr denning potentially failing to declare these conflicts of interest. How serious is this . Its very serious given the regulators focus on senior managers declaring this type of conflict of interest, or what appears to be this type of conflict of interest. It is, yeah, very serious. Mr denning has repeatedly pointed out that he doesnt own the shares in the three companies. But our documents show they were bought through a secretive offshore fund. So, what links that secret fund to mark denning . Well, this village in devon is a big, fat clue because this is morebath, where mr denning has one of his luxury homes, and the secret fund was called morebath. We think mr denning used the Morebath Fund to hide his investments from his employers at Capital Group. The documents show mr denning made the Investment Decisions for the Morebath Fund, and they say the secret fund was part of mr dennings personal fortune. The whole point behind the regime, really, in relation to declaring conflicts of interest is to protect investors. If there was an intention by the fund manager to financially benefit themselves, then that does raise serious concerns in relation to their actions. So, overall, it is a very serious position to be in. We wrote to Capital Group about mr dennings secret investment. Five days later, he was forced to resign. Capital group says it has a code of ethics that holds associates to the highest standard of conduct. It said. Mr denning denies any wrongdoing. His lawyers say he received poor advice and he believed that he had complied with all of his relevant duties. Now, we only know about Mark Dennings secret deals because of the leaked documents. There are thousands of Fund Managers and there is very little oversight. Lets look again at Neil Woodfords case. He too seems to have been playing fast and loose with the rules. He invested in another cutting edge company this one was near cambridge. Benevolentai is trying to build a computer brain that will identify cures for diseases. They built their new Research Centre in this science park in the cambridgeshire countryside and its a very, very secure site. This is as near as you can get if you just turn up, and they say that its at that facility that theyre building their machine brain. If it works, it could revolutionise medicine and make Neil Woodford and his investors a fortune. But its another risky investment. Neil woodford told investors that he was going to be a value investor, so companies that made a profit, companies that paid a lot of dividends, companies that had cash at the bank, companies that generated cash, and then he went and invested a lot of his money in the companies which regularly have to turn around to their backers and say, we need more money. The problem is Tech Companies rarely make a profit in the early years, so no one really knows what theyre worth. Take benevolentai. When Neil Woodford invests injune 2015, its valued at £150 million. Four months later, its revalued valued at £1. 15 billion. Three years later, its gone up again to £1. 11 billion. Critics have accused Neil Woodford of deliberately overvaluing companies to make his fund look healthier. His lawyers say he isnt responsible for valuations, which are carried out by independent experts. But two years ago, the regulator said he was involved and ordered him to back off. We had to intervene in the early years of this particular fund, when the valuations were, in fact, being done by woodford, within that context, and we intervened to ensure that they were not going to be done by woodford because the fundamental conflict of interest, and thats exactly why the investment manager is not allowed to be responsible for the valuation of the fund. One person definitely benefits from sky high valuations. Neil woodford. His fees are based on the value of the fund, so the higher it goes, the more cash he gets. Systematically, those transactions have bloated, on a temporary basis, the value of his funds, allowing him to charge additional management fees, him to make even more money personally. Last year, Neil Woodford made £24 million from his funds. Even after the fund was gated, investors were forced to continue paying fees. Since the crisis erupted injune of 2019, he is probably about £5 to £6 million richer than when all this began, while everyone else has got poorer. Mr woodfords lawyers said the fees only cover costs and. And that he was sorry for the impact on investors. Get your camera, get your camera, right, good. And go, and go. Mr woodford says he cant answer questions because of the ongoing regulatory investigation. But he could if he wanted to, and we think investors deserve some answers. Mr woodford, hi, its richard bilton, i work for bbc panorama. Can i ask you a couple of questions, please . Did you overvalue some of the companies in yourfund, sir . Could i have a quick word with you . That would get you a few pounds, wouldnt it and make the fund look healthy. What you say, sir, to the people who trusted you, put money in yourfund and now they cant reach you . What do you say to them . Sir, can i have a quick word with you, mr woodford . People trusted you, they put money in your fund and now its gated and they cant get to it. Any word, sir, for them . He sighs. No word. Mr woodford, he likes to give speeches on little video recordings, he doesnt like answering questions. But he is still taking the fees. That was the last time he went to work. One hour after we approached him, Neil Woodford was sacked by the administrators of the fund. All his funds have now been closed down. His investors are only expected to get a fraction of their cash back. I think because hes made so much money out of it, whilst investors have lost money as a result of things that he did, yes, i would like to see him investigated. At the very least, he should be drummed out of financial services. He has no right to be managing other peoples money. What weve found is that the rules dont always work. Billions of pounds of our money are being gambled without proper checks. You ought to be able to put your trust in these people, i think this just undermines the whole trust in the whole system. How long can you afford to keep losing 300 quid a day . She sighs. I cant do anything about it. Fund managers are supposed to protect investors. But how can we trust them with our money when they operate out of sight and out of reach . Hello. Theres a battle taking place across the uk between mild and called out to see who wins out for the weekend. The cold air eventually wins. Before that happens, though, after a touch of frost across northern parts of the uk to start friday and a mild start to the south, there is rain moving in. South west england, wales, the west midlands, across northern england, the eastern side of northern ireland, and southern scotland on the friday. Temperature contrast onto the uk. Showers, wintry in hills in northern scotland. Gales and coastal gale to the south as well. A notice as we go through friday night and into saturday morning, the rain hanging about. Rain totals mounting to the moors of the southwest welsh hills, pennines, they could be some flooding. There isa they could be some flooding. There is a risk of some travel disruption. Eventually on through saturday, all of this is moving southwards away from the wettest areas, into east anglia and south east england. Writer skies following on behind. This is bbc news. Welcome if youre watching here in the uk, on pbs in america, or around the globe. My names mike embley. 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