UPDATE 5-Neil Woodford sacked as flagship Equity Income Fund to be shut

* LF Woodford Equity Income Fund to be wound up

* BlackRock to sell off listed assets

* PJT Partners to continue to sell illiquid assets

* BoE's Carney highlights structural issue in open-ended
funds
(Adds Treasury Select Committee, detail, investor, updates
shares)

By Simon Jessop, Sinead Cruise and Carolyn Cohn

LONDON, Oct 15 (Reuters) - Neil Woodford has been ousted
from his flagship LF Woodford Equity Income Fund which will be
shut down to pay back investors whose money has been trapped
since June.

Trading in the now 3 billion pound ($3.8 billion) fund
managed by Woodford, one of Britain's most high-profile money
managers, was suspended four months ago after poor performance
led to an increase in demand from clients to take their money
back.

At the heart of Woodford's troubles was the scale of his
holdings in unlisted or illiquid assets, which have become a
focal point for regulators and lawmakers in subsequent weeks -
especially as Woodford continued to charge investors management
fees.

Bank of England Governor Mark Carney said on Tuesday that
the closure should act as a reminder of the structural problems
in open-ended investment funds like Woodford's, which allow
investors to take their money out any day they like.

The BoE and the Financial Conduct Authority (FCA) will spell
out how investors can pull cash from open-ended funds in
December, following a review.

Despite Woodford trying to sell its illiquid holdings ahead
of a planned December fund reopening, administrator Link Fund
Solutions (LFS) told investors the process had not gone as
planned.

As such, Link said the fund risked an extended suspension in
December, potentially leading to unequal treatment of investors.

"Whilst progress has been made in relation to repositioning
the Fund's assets, this has unfortunately not been sufficient to
allow reasonable certainty as to when the repositioning would be
fully achieved and the Fund could be re-opened," Link said.

Neil Woodford, in a separate statement, firmly rejected the
move to shut the fund and oust him as manager.

"This was Link's decision and one I cannot accept, nor
believe is in the long-term interests of LF Woodford Equity
Income fund investors."

A source close to Woodford told Reuters that Link's decision
was a "complete surprise" and the manager had only learnt of
Link's intention to close the fund late on Monday.

The FCA said it "welcomed the removal of uncertainty"
provided by Link's decision to shut the fund.

It "means investors should receive some of their money back
sooner than had the fund remained suspended for a longer
period," the regulator said.

Woodford will cease to be the fund's investment manager with
immediate effect and its assets will be split into two
portfolios, LFS said in a statement.

BlackRock Advisors will sell the fund's listed
assets while PJT Partners will continue with its previously
agreed role in selling the fund's illiquid assets, Link said.

BlackRock will switch the portfolio into money market funds
for investors posted online.

A spokeswoman for BlackRock said it would "seek to maximise
value for investors, balancing the need for a timely return of
capital with the challenges of the illiquidity profile of the
portfolio". PJT declined to comment.

The winding up of the LF Woodford Equity Income Fund -
which will be stripped of Woodford's name - will begin on Jan.
17, 2020, Link said, when investors should receive an initial
payment.

Top holdings in the fund according to the last published
data in April include housebuilders Taylor Wimpey,
Barratt Developments and subprime lender Provident
Financial Group.

FALLEN STAR

Darius McDermott, managing director of financial adviser
Chelsea Financial Services, said the situation was "a mess" and
the fund's closure would make it "a forced seller of all
stocks".

Britain's Treasury Committee of lawmakers "will want to
examine what lessons can be learned from this saga", interim
chair Catherine McKinnell said.

Oxford-based Woodford made his name at Invesco Perpetual
after avoiding the collapse of the tech bubble at the turn of
the century as well as banks ahead of the financial
crisis.

After more than two decades at Invesco, he set up his own
firm in 2014, quickly amassing billions in mostly retail
investor assets, much of it from investment platform Hargreaves
Lansdown, which continued to back the troubled fund
right up to its suspension.

At its peak the fund managed more than 10 billion pounds.

Shares in Neil Woodford's separate listed fund Woodford
Patient Capital Trust (WPCT) slid to a record low and
by 1225 GMT were trading down 7%.

Hundreds of thousands of retail investors had money in the
closed fund.

Nooman Haque, a banker whose family invested 10,000 pounds,
said Woodford's decision to continue charging fees during the
suspension "did not endear him to investors".

Link said in the Q&A that fees would still be paid to
BlackRock and other service providers, although it would forego
its own fee for acting as authorised corporate director.

Mark Robinson, a property investment manager who invested
around 5,000 pounds on behalf of his children, said the funds
industry needed to learn from the "debacle".

($1 = 0.7904 pounds)
(Editing by Susan Fenton)