* 133,769 clients have direct holdings in suspended fund
* Number hits 291,520 when indirect stakes added
* Combined value of stake in 3.7 bln stg fund is 1.6 bln
(Adds detail from Hargreaves letter, separate letter fromGuernsey stock exchange, Woodford response, updates shares)By Simon Jessop, Muvija M and Carolyn CohnLONDON, June 19 (Reuters) - British investment platformHargreaves Lansdown said nearly a quarter of itsclients are exposed to Neil Woodford's suspended fund, pilingfurther pressure on the company for heavily backing the fundsince it was launched.The scale of retail investors' holdings in the fund haspropelled Woodford to the front of Britain's business pages,drawing criticism from savers and politicians alike and castingdoubts over his investing style.In a letter to the UK's treasury committee published onWednesday, Hargreaves CEO Chris Hill said 133,769 clients had adirect holding worth 1.1 billion pounds in the suspended 3.7billion pounds ($4.65 billion) LF Woodford Equity Income Fund.Hargreaves - which bills itself as Britain's No.1"investment supermarket" - said a total of 291,520 clients with1.6 billion pounds at stake were affected once those indirectlyexposed through various fund-of-fund products were included.The scale of the exposure is likely to raise pressure onHargreaves and particularly how it oversees its 'best-buy' listof funds, which many clients rely on.
Woodford's fund was first included in 2014, shortly afterits launch, and only taken off on the day trading in it wassuspended.Shares in Hargreaves were down 1.4% at 1335 GMT, lagging a0.3% fall in the wider FTSE 100 . Hargreaves shares havelost nearly 15% in value since the fund was suspended on June 3.
STAKES IN PRIVATE COMPANIES
Hill was responding to questions raised by the the chair ofthe committee, Nicky Morgan, about Hargreaves' connections tothe suspended fund. The letter comes a day after Britain'smarkets regulator opened a formal investigation.At the heart of the probe by the Financial Conduct Authorityis the fund's handling of stakes in a number of privatecompanies, which were harder to sell quickly to meet an increasein client demand to redeem. The FCA has said it had been in contact with the authorisedmanager of the fund, Link Fund Solutions, in early 2018 afterthe fund twice breached rules on not investing more than 10% ofits assets in unlisted companies - something Hill saidHargreaves was unaware of."We met with the fund manager that month and urged him toaddress the issue. The manager committed to us that he wouldmake no new investments into unquoted businesses from thatpoint," Hill said in the letter to Morgan."We have subsequently... found out that Woodford twicebreached this limit in February and March 2018. They did notinform us of this on either occasion."However a Woodford spokesman said it had not breached itsagreement with Hargreaves, saying it was only required to informthem if it was over the 10% threshold at the end of each month."Consistent with all clients, Woodford provided month-enddata for investors and at no time was there a month-end passivebreach," the spokesman said.In a separate letter to Morgan made available on Wednesdayby lawmakers, Guernsey's stock exchange said it had firstcontacted the FCA with concerns over the fund on April 15.It also detailed a telephone call with the FCA on June 7 inwhich it shared "areas of potential regulatory concernsregarding the Fund's composition and valuations".
Hill also echoed the concerns of the Guernsey exchange onthe valuation of the fund's assets and said it had tried to callLink since the suspension to discuss that and when the fundwould reopen, but received no response.Link did not respond to a request for comment by Reuters.Since adding the Woodford fund to its 'best-buy' list,Hargreaves staff had met or held calls with Woodford and histeam 31 times, Hill said.($1 = 0.7948 pounds)<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Hargreaves lags FTSE 100 since Woodford fund suspension ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Deepa Babington)
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