FCA investigating Odey Asset Management

The UK’s top financial regulator is investigating Odey Asset Management, the hedge fund firm whose founder Crispin Odey is facing more than a dozen accusations of sexual assault and harassment, people familiar with the situation told the Financial Times.

The Financial Conduct Authority opened an investigation into Odey Asset Management two years ago, according to one person familiar with the probe.

The FCA’s investigation was initially focused on non-financial misconduct, according to the person, but later shifted to corporate governance issues after Odey fired his executive committee in 2021.

The regulator may now widen its investigation to consider potential non-financial misconduct by Odey, following an FT investigation that chronicled how the hedge fund manager evaded sexual assault allegations for decades, the person familiar with the probe added.

On Thursday Morgan Stanley also moved to sever ties with the firm in the wake of the FT story. According to people familiar with the situation, the bank has begun the process of terminating its prime broking relationship with Odey.

Morgan Stanley and Odey Asset Management declined to comment and did not immediately respond to requests to comment on the FCA probe.

The FCA told the FT: “We are unable to comment on individuals or specific firms. However, we take allegations of non-financial misconduct seriously and expect firms to have adequate governance procedures in place that ensures allegations of misconduct are properly investigated.”

Odey told Reuters on Thursday that Morgan Stanley’s move was “a massively quick reaction to an allegation by the FT”.

JPMorgan is also reviewing its prime broking relationship with Odey Asset
Management in light of the allegations in the FT, according to two
people familiar with the situation. JPMorgan declined to comment.

Prime brokers offer a range of services to their hedge fund clients, including stock lending, leverage and trade execution. They also link hedge funds with potential investors such as pension funds, foundations and endowments.

Harriett Baldwin, a Conservative MP who chairs the Treasury select committee, said: “The Financial Times has published an important piece of journalism and the range of women they have interviewed paints a troubling picture of an inappropriate work environment.

“I am sure investors and prospective investors in the funds, employees and prospective employees and the regulator will read this article with concern.”

Morgan Stanley’s decision came after the publication of an FT investigation on Thursday into allegations that Odey had sexually harassed or assaulted 13 women over the past 25 years. Eight of the women included in the investigation alleged that they were sexually assaulted by him. A law firm representing Odey said allegations made against him were “strenuously disputed”.

The FT revealed that Odey fired his executive committee in December 2021, after they attempted to discipline him for breaking a “final written warning” prohibiting him from behaving inappropriately with female staff.

The most recent alleged sexual assault took place during the same month after a dinner party in Odey’s Gloucestershire mansion, Eastbach Court. He invited a female acquaintance to discuss a legal matter one-on-one in his sitting room. When the discussion ended, he violently groped her by grabbing her breasts, forcing his tongue into her mouth and clamping her hand to his erect penis.

The investigation also found that partners at Odey Asset Management were aware of his alleged mistreatment of women as far back as 2004 when a receptionist, Jae-Ann Maher, resigned and initiated a legal complaint against the firm.

In her resignation letter she said she was “prone to receiving unwanted and unrequested sexual attention from Mr Crispin Odey” in the form of “massages, kisses, embraces and crude sexually suggestive comments”. It took another 16 years for the firm’s executive committee to formally investigate the behaviour of its founder. 

Jess Phillips, a Labour MP and shadow minister for domestic violence and safeguarding, said the FCA should “absolutely carry out their own investigation and give these serious allegations of sexual assault the attention they deserve”.

The firm’s assets under management have fallen from their peak of $13.3bn several years ago. Odey stepped down as co-chief executive of the firm in November 2020, although he remained the majority shareholder. 

That month the company established a new subsidiary, Brook Asset Management, and later rebranded almost half of its funds under the Brook name. 

Additional reporting by Laura Hughes in London