Odey in talks with banks after new Roil Fund Manager allegations

(Bloomberg) – Odey Asset Management, whose founding partner is facing new sexual assault allegations, is in talks with some of the world’s biggest investment banks after they began distancing themselves from the hedge fund manager Crispin Odey.

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In a letter to investors seen by Bloomberg News, the London-based company’s chief executive, Peter Martin, said he was 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.

Hours after the new allegations were published, 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 allegations, the people said, asking not to be identified as the details are private.

Martin said firm lawyers were reviewing the claims and senior management “didn’t recognize” the picture painted in a Financial Times investigation published Thursday. The report details Odey’s treatment of women over a 25-year period, which includes multiple allegations of harassment or sexual assault.

“OAM treats, now and in the past, all of these allegations extremely seriously,” the company 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 has said. This can be expanded to encompass the latest claims.

“We take allegations of non-financial misconduct seriously and expect companies to have adequate governance procedures in place to ensure that allegations of misconduct are properly investigated,” a doorman said. FCA spokesman in a statement, while declining to comment specifically on Odey.

A spokesperson for Odey declined to comment on the letter. Representatives for the company, 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 the prime broker for Odey’s flagship hedge fund in a recent investor document, declined to comment.

The allegations about Odey are the latest in a series the asset manager has faced in recent years. In 2021 he was acquitted of assault charges in UK courts, but new charges against him surfaced soon after, with two women coming forward to Bloomberg News. Others later appeared in a Tortoise Media podcast.

A law firm representing Odey said it “vigorously contested” the allegations, according to the FT, which previously reported Morgan Stanley’s decision to distance itself.

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“Trust is essential for customers, and companies can maintain it by being transparent about their standards and internal culture,” said Bev Shah, founder of City Hive, a London-based advocacy group that promotes diversity in the industry. of investment management. “Looks like they weren’t paying attention, and if so, what else did they miss?”

Odey is known for courting controversy, from his support for Brexit to his ostentatious lifestyle, and from his short bets against the pound to his spectacular losses and rebounds.

“Crispin Odey, whom I knew professionally, has long had a reputation for being eccentric and eclectic,” said Jacob Schmidt, CEO of Schmidt Research Partners. “Accusations are rarely unjustified. Therefore, I’m not surprised that MS is cutting links and others are looking into it because the reputational risks are huge.

Last year, Odey celebrated its best year of earnings with its hedge fund up 152%, fueled mainly by its highly leveraged short bets on long-term UK government bonds as inflation and political unrest rocked the British economy. His fund was down 4% through April this year, according to an investor document.

Yet years of earlier losses and turmoil in his business saw most of his investors leave. His hedge fund, which once held $1.8 billion in assets at its peak in 2015, had fallen to 289 million euros ($311 million) by the end of April. Company-wide assets have fallen to around $3 billion from the $13 billion he managed at his peak.

When Odey was fighting the assault charge in 2020, the firm rebranded several of its funds to remove its name and housed them under a new entity called Brook Asset Management. The bulk of the company’s funds are now managed by other portfolio managers, including James Hanbury and Oliver Kelton.

–With assistance from Jonathan Browning, Leonard Kehnscherper, Sridhar Natarajan, David Ramli, Sam Nagarajan and Russell Ward.

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