The Financial Conduct Authority has publicly confirmed its investigation into Crispin Odey and Odey Asset Management for the first time and defended its “intensive” oversight of the hedge fund group.
In a letter to the Treasury select committee published on Wednesday, FCA chief executive Nikhil Rathi said that while there was a limit to how much he could say, “in the exceptional circumstances of this case, it is necessary and appropriate for me to confirm to the Committee that the FCA has ongoing investigations into both Mr Crispin Odey and Odey Asset Management LLP”.
The investigation into Odey is focused on “allegations that he dismissed OAM’s Executive Committee for an improper purpose,” Rathi wrote, and whether he is a “fit and proper person” to work in financial services.
The regulator is also looking at whether he had “failed to comply” with conduct rules on integrity, due skill, care and diligence. Odey fired the hedge fund’s executive committee in 2021.
The Financial Times last month revealed 13 women alleged they had been sexually harassed or assaulted by Odey over a period spanning more than two decades. He strenuously denies the allegations.
Rathi said that the FCA had been in contact with the police in relation to the “potentially criminal” nature of the allegations.
The FCA is investigating Odey Asset Management for “possible contraventions of the FCA’s Principles for Business for failing to conduct its affairs with due skill, care and diligence, and failing to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems and controls”.
Odey Asset Management declined to comment and Crispin Odey did not immediately respond to a request for comment.
Rathi said the investigations were opened in the middle of 2021 and that the FCA’s supervision of Odey Asset Management had been “intensive” since 2020.
He also confirmed that Odey had threatened a judicial review over the investigation, as previously reported by the FT. “We responded robustly to this. In the event, court proceedings were not commenced and we continued to investigate,” he said.
Odey was ousted as a partner of the hedge fund, which managed $4.4bn, following the allegations and the group is now being effectively dismantled as some of its funds and portfolio managers are transferred to other firms.
Morgan Stanley and JPMorgan Chase are among the major banks to have severed tied with Odey, stripping the hedge fund of the credit risk management tools it needs to trade.