World’s Biggest Banks Pull Back From Odey After New Allegations

Some of the world’s largest investment banks have started distancing themselves from hedge fund manager Crispin Odey, hours after the publication of fresh allegations of sexual assault against women over several decades.

(Bloomberg) — Some of the world’s largest investment banks have started distancing themselves from hedge fund manager Crispin Odey, hours after the publication of fresh allegations of sexual assault against women over several decades.  

Morgan Stanley has begun the process of terminating its prime-brokerage relationship with his namesake firm, Odey Asset Management, while JPMorgan Chase & Co. and Goldman Sachs Group Inc. are reviewing their relationships in light of the claims, according to people with knowledge of the matter, who asked not to be identified because 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 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.

Representatives for 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 a prime broker for Odey’s flagship hedge fund in a recent investor document, declined to comment. 

Multiple Allegations

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

The allegations are the latest in a series Odey 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.

“Crispin Odey, whom I’ve known in a professional capacity, has had a long reputation of being eccentric and eclectic,” said Jacob Schmidt, chief executive officer 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.”

Odey is known for courting controversy from his support of Brexit to his conspicuous lifestyle, his short bets against the pound to his spectacular losses and bounce backs. 

Last year, he 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.

–With assistance from Jonathan Browning, Leonard Kehnscherper and Sridhar Natarajan.

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