Odey Sacked From His Hedge Fund Firm After Assault Allegations

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(Bloomberg) — Odey Asset Management has removed its founder Crispin Odey from the firm’s partnership in a stunning turn of events for the famed hedge fund manager who is facing fresh sexual assault allegations. 

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“As from today, he will no longer have any economic or personal involvement in the partnership,” the London-based firm said Saturday in a statement. 

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Crispin Odey, who denies the allegations, declined to comment.

The partnership will now be owned and controlled by the remaining partners and managed as an independent legal entity, the firm said.

Fallout for Odey, 64, has been swift since a Financial Times investigation published Thursday into his treatment of women over a 25-year period. 

The allegations are the latest in a series the asset manager has faced in recent years. In 2021, he was acquitted of assault charges in British courts, but new accusations against him surfaced soon after, with two women coming forward to Bloomberg News and another to the Times of London newspaper. Later, more appeared in a Tortoise Media podcast.

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The controversies surrounding Odey and his removal are stark reminders of unforeseen risks investors face when they chase hedge funds built around big-name traders. Increasingly, they are moving away from betting on individuals and are instead migrating to firms where multiple traders take risk in order to minimise the so-called key man risk.

‘Looking very bad’

“Wealth and fame can distort a person’s perception of right and wrong,” said Don Steinbrugge, head of Agecroft Partners, which helps hedge funds raise money. “I hope the allegations are wrong, but the evidence is looking very bad for Crispin.” 

Born into a well-known family — Odey’s grandfather was a Tory MP and his mother came from an old-line mercantile family — the University of Oxford alumnus started his firm in 1991. In recent years, he’s been tabloid fodder for everything from his support of Brexit to his conspicuous lifestyle. He’s sparked outrage shorting the pound. He’s been mocked for his predictions of doom in the midst of the longest bull market in history.

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Most of his investors have deserted him following his hedge fund’s wild swings between outsized gains and stark losses. Last year marked his best on record, a stunning turnaround from years of losses.

Pulling Money  

Soon after the FT article was published, Morgan Stanley began the process of terminating its prime-brokerage relationship with the firm. JPMorgan Chase & Co. and Goldman Sachs Group Inc. initiated reviews of their relationships. Some investors have also pulled their money out.

“Their rush to judgment looked like wanton virtue signaling, yet was also an acknowledgment they knew Crispin was already on two strikes,” Adrian Flook, a former member of Parliament in the UK and a private investor into Odey and its affiliate Brook Asset Management funds.

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Schroders Plc said Friday it pulled investments from Odey funds and Canada Life suspended its relationship with the firm with “immediate effect” and said it won’t be accepting any new fund flows. Reuters reported the decisions earlier.

The UK’s financial watchdog — the Financial Conduct Authority — is in the midst of a two-year investigation into the asset manager, a person familiar with the matter said on Thursday. That may be widened to encompass the latest allegations.

The firm has sought to reassure investors. In a letter to investors seen by Bloomberg News, Chief Executive Officer Peter Martin said Odey Asset Management is in “active discussions with all service providers and we are confident that our service providers will continue to work with us to ensure that the interests of investors are protected.”

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Martin said the firm’s lawyers are looking into the claims and the senior management “do not recognize” the picture painted in the report. 

Rollercoaster Ride

Before winning his case in 2021, Odey stepped down as CEO of the firm, which renamed several funds and created the trading name Brook Asset Management to market them.

His roller coaster ride has led to assets in his flagship hedge fund slumping to about $310 million at the end of April from $1.8 billion in assets at its peak in 2015. Assets at the whole firm have also slumped to about $3 billion from more than $13 billion at its height. The majority of the firm’s assets are managed by portfolio managers including James Hanbury and Oliver Kelton.

The company’s move “makes a lot of sense given how heavy the allegations are that Crispin Odey is facing,” said Berlin-based Harald Berlinicke, the owner and chief investment officer of Max-Berlinicke-Erben family office. “It hopefully gives the other portfolio managers such as James Hanbury a good chance to move to business as usual.”

—With assistance from Silas Brown.

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