(Reuters) – Odey Asset Management (OAM) is fighting for survival after a media report alleging sexual misconduct by its founder Crispin Odey, one of Britain’s best-known hedge fund managers, prompted its banks and investors sever ties with the firm.
OAM said in a letter dated Thursday, and seen by Reuters, that it is in “advanced discussions” to move funds and staff to other asset managers. The asset manager had already imposed exit curbs on key funds earlier in the week.
The Financial Times and Tortoise, in a joint publication on June 8, reported allegations by 13 women that Odey had sexually assaulted or harassed them over a 25-year period.
Odey told Reuters last week that the report was a “rehash of an old article and none of the allegations have been stood up in a courtroom or an investigation”.
Here are some key facts about Odey, London-based OAM, the allegations, and their fallout:
WHO ARE CRISPIN ODEY AND ODEY ASSET MANAGEMENT?
Odey, 64, founded the asset management firm which bears his name in 1991.
OAM is known for highly leveraged bets on global equities, debt, currencies and commodities. Besides OAM, the group also runs Brook Asset Management and Odey Wealth.
Former British Chancellor Kwasi Kwarteng was once an adviser to OAM.
Crispin Odey was a leading backer of Brexit and a donor to Britain’s ruling Conservative Party.
WHAT IS ODEY BEST KNOWN FOR?
Odey rose to prominence during the 2008 financial crisis when he made a fortune short-selling bank shares, a practice that involves betting on a decline in the price of a stock.
HOW BIG IS ODEY ASSET MANAGEMENT?
The firm had $4.8 billion in assets under management, according to documents filed with the Securities and Exchange Commission in September 2022.
HOW HAS ODEY’S FIRM PERFORMED?
OAM is known for its volatile performance. Its flagship Odey European fund, is down roughly 8% this year, after it returned around 151% in 2022, its best year ever, as it shorted UK government bonds while buying inflation linked bonds.
HOW HAS THE UK’S REGULATOR RESPONDED?
Separately, British regulator the Financial Conduct Authority (FCA) has been investigating the company since 2021, a source familiar with the situation told Reuters.
Lawmakers on Britain’s Treasury Select Committee wrote to the FCA on Wednesday to question its supervision. The letter, which the committee has asked it to answer by July 5, is likely to spark increased scrutiny of the FCA’s handling of Odey
The FT/Tortoise report said Odey fired his executive committee in 2021 after he was given a written warning on how to communicate with female staff. OAM declined to comment.
The fund manager was cleared of indecent assault charges by a British court in 2021.
WHAT HAVE BEEN THE REPERCUSSIONS FOR OAM?
Odey Asset Management’s prime brokers, including Goldman Sachs, JPMorgan and Morgan Stanley and UBS have been cutting their ties with the firm.
Prime brokers are vital for a hedge fund as they provide trading services, leverage for bets and securities custody.
Schroders and Canada Life last week moved to cut back their dealings with asset management businesses with links to Odey.
HOW HAS OAM RESPONDED?
OAM “does not recognize the picture of the firm that has been painted” by allegations of sexual misconduct by Odey published by media, it told investors in a letter dated June 8.
Within days, OAM was distancing itself from Odey and on June 10 the firm’s executive committee said he would be leaving.
OAM gated – the industry term used when a fund prevents withdrawals – its Brook Asset Management fund managed by James Hanbury on June 12 and closed another, a separate letter to investors seen by Reuters on June 13 shows.
By Thursday, the firm was in discussions to move funds and staff after client withdrawals surged, prompting some restriction on further exits.
CAN OAM SURVIVE WITHOUT ODEY?
It is looking increasingly unlikely, even though larger funds such as Odey Asset Management Group are made up of many funds with different trading strategies.
Brook Asset Management and Odey Wealth, both part of the Odey Group, are run by different portfolio managers such as Hanbury and Peter Martin, the chief executive of OAM.
The Odey European Inc fund was solely overseen by Odey and a majority of the 151 million euros ($162 million) it had under management was his own invested money, said two people familiar with the matter.
($1 = 0.9305 euros)
(Reporting by Carolina Mandl in New York and Nell Mackenzie in London; Editing by Elisa Martinuzzi, Dhara Ranasinghe and Alexander Smith)
