World’s biggest banks pull out of Odey after allegations

(Bloomberg) — Some of the world’s biggest investment banks have begun to distance themselves from hedge fund manager Crispin Odey, hours after decades of fresh allegations of sexual assaults against women emerged.

Bloomberg’s Most Read

Morgan Stanley has begun the process of terminating its prime brokerage relationship with its namesake company, Odey Asset Management, while JPMorgan Chase & Co. and Goldman Sachs Group Inc. are reviewing their relationships in light of the complaints, according to people with knowledge. of the case, who asked not to be identified as the details are private.

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.

Representatives from Odey Asset Management, Morgan Stanley, JPMorgan and Goldman declined to comment. 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.

Multiple allegations

The Financial Times, which reported earlier on Morgan Stanley’s decision, published an investigation on Thursday into Odey’s treatment of women over a 25-year period, which included multiple allegations of harassment or sexual assault. A law firm representing Odey said it “vigorously contested” the allegations, according to the newspaper report.

In a letter to investors seen by Bloomberg News, Odey Asset Management chief executive Peter Martin said the company’s senior management “does not recognize” the image of the company painted by the survey and that it is in discussion with service providers.

“OAM treats, now and in the past, all of these allegations extremely seriously,” the firm said in the letter, adding that its lawyers are reviewing the claims. “We are confident that our service providers will continue to work with us to ensure the interests of investors are protected.”

A spokesperson for the firm did not immediately respond to a request for comment on the letter.

The allegations are the latest in a series Odey 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.

“Crispin Odey, whom I have known professionally, has long had a reputation for being eccentric and eclectic,” said Jacob Schmidt, managing director 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.

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

Last year he celebrated his best year of earnings with his hedge fund up 152%, fueled mainly by his highly leveraged short bets on long-term UK government bonds as inflation and political unrest was disrupting 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 help from Jonathan Browning, Leonard Kehnscherper, Sridhar Natarajan and David Ramli.

(Adds letter from Odey Asset Management to investors in 8th paragraph.)

Bloomberg Businessweek’s Most Read

©2023 Bloomberg LP

Leave a Comment