Liquidity and Woodford

Man years ago I read of a young stockbroker who was employed by Cazenove tried in 1931 to sell £15,000 worth of War Loan. He was so staggered by the total absence of a bid that he started crying. Or so it is recorded.

However, it reminds me of an extremely important point which is that there is no law and never will be any law obliging market makers or anybody else to bid for stock. I therefore have some sympathy with Neil Woodford whom the FCA proposes to fine £6m personally and whose management company is to get slammed for £40m.

Some will remark that Neil Woodford deliberately bought stock cheap and parlayed it up to an illiquid fund whose values could not in practice be challenged until, one day, they were. There is no evidence that such a breach of fiduciary duty occurred. (Quite why Kent county council decided to splosh £200m in such an investment is another matter - and, surely, some councillors have questions to answer here.)