Clients, Banking Partners Retreat From Odey After Allegations
Odey Asset Management, whose founder Crispin Odey is facing new allegations of sexual assault, is scrambling to reassure clients and business partners after some firms pulled money and major investment banks started distancing themselves.
Hours after the publication of the fresh allegations, Morgan Stanley began the process of terminating its prime-brokerage relationship with Odey, according to people with knowledge of the matter. JPMorgan Chase & Co. and Goldman Sachs Group Inc. were also reviewing their relationships in light of the claims, the people said, asking not to be identified because the details are private.
Later on Friday, Schroders Plc said it had pulled investments from Odey funds and Canada Life suspended its relationship with the firm with “immediate effect” and won’t be accepting any new fund flows. Reuters reported the decisions earlier.
Martin said the firm’s lawyers are looking into the claims and the senior management “do not recognize” the picture painted in a Financial Times investigation published on Thursday. The report detailed Odey’s treatment of women over a 25-year period that included multiple allegations of sexual harassment or assault.
“OAM treats, now and in the past, all such allegations extremely seriously,” the firm said in the letter.
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. That may be widened to encompass the latest allegations.
“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,” a FCA spokesperson said in a statement, while declining to comment specifically on Odey.
|Odey’s Hedge Fund Soars 152% in Best Year on Inflation Bet|
A spokesman for Odey declined to comment on the letter. Representatives for the firm, Morgan Stanley, JPMorgan and Goldman declined to comment on the latest status of their relationship. Prime brokers offer a range of services to their hedge fund clients, including leverage and trade execution.
A representative for UBS Group AG, which is also listed as a prime broker for Odey’s flagship hedge fund in a recent investor document, declined to comment.
The allegations roiling Odey 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. Later, more appeared in a Tortoise Media Podcast.
A law firm representing Odey said he “strenuously disputed” the allegations, according to the FT, which earlier reported Morgan Stanley’s move to distance itself.
“Trust is key for clients, and firms can maintain that by being transparent about their standards and internal culture,” said Bev Shah, founder of City Hive, an advocacy group in London that promotes diversity in the investment management industry. “It looks like they were not paying attention, and if that is the case, what else have they been missing?”
Odey is known for courting controversy from his support of Brexit to his conspicuous lifestyle, and from his short bets against the pound to his spectacular losses and bounce backs.
“Crispin Odey, whom I’ve known in a professional capacity, has had a long reputation of being eccentric and eclectic,” said Jacob Schmidt, CEO of Schmidt Research Partners. “Accusations rarely come unjustified. Hence, I’m not surprised that MS cut ties and others are reviewing as the reputational risks are massive.”
Last year, Odey celebrated his best ever year of gains with his hedge fund surging 152%, powered mainly by his highly leveraged short wagers on long-dated UK government bonds as inflation and political turmoil roiled the British economy. His fund was down 4% through April this year, according to an investor document.
Yet, years of previous losses and turmoil at his firm has seen most of his investors gone. His hedge fund, which once had $1.8 billion in assets at its peak in 2015, was down to €289 million ($311 million) at the end of April. Firm-wide assets have dwindled to about $3 billion from $13 billion it managed at its height.
When Odey was fighting the assault charge in 2020, the firm rebranded several of its funds to remove his name and housed them under a new entity called Brook Asset Management. The bulk of the firm’s funds are now run by other portfolio managers that include James Hanbury and Oliver Kelton.