The financial watchdog confirmed it is investigating whether hedge fund manager Crispin Odey is a “fit and proper person” to work in the finance industry as the regulator defended its supervisory work on non-financial misconduct.
Mr Odey was accused of a series of allegations of sexual harassment or misconduct by 13 women over a period of time in reports by the Financial Times. Mr Odey, 64, has denied the allegations.
Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), revealed that its investigation into Mr Odey and Odey Asset Management (OAM) began in 2021. Mr Odey fired the hedge fund’s executive committee in 2021.
He told MPs on the parliamentary Treasury Select Committee the inquiry is focused on “allegations that Mr Odey dismissed OAM’s executive committee for an improper purpose” and whether he is a “fit and proper person” to work in financial services. The letter did not give details of the alleged improper purpose. OAM declined to comment.
The probe is examining whether the businessman “failed to comply with the FCA’s conduct rules relating to integrity and acting with due skill, care and diligence”.
Mr Rathi confirmed the FCA has been in contact with the police, as some of the allegations are “potentially criminal in nature”.
The fund manager, who founded OAM in 1991, was ousted from the hedge fund in June after the Financial Times and Tortoise Media jointly reported the allegations of sexual misconduct.
Individuals can be banned from working in UK financial services if the FCA deems they are not “fit and proper”.
The regulator said it is investigating OAM 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”.
Mr Rathi said Mr Odey threatened a judicial review over the FCA’s investigation, which it “responded robustly to”, but that court proceedings did not start and it continued with its probe.
The FCA said Mr Odey, one of Britain’s most controversial fund managers, had not held an approved senior manager role since 2020.
The FCA will be questioned by the parliamentary select committee later this month about its supervision of OAM and Mr Odey. Mr Rathi told MPs the FCA’s oversight of OAM had been “intensive” since 2020.
Mr Rathi said the watchdog believes that a “corporate culture that tolerates sexual harassment or other non-financial misconduct is unlikely to be one in which people feel able to speak up and challenge decisions, or one in which they will have faith that concerns will be independently and fairly assessed.”
Such a culture, he said, “also raises questions about a firm’s decision making and risk management. We see that the vast majority of firms we regulate understand that we consider non-financial misconduct relevant to assessments of fitness and propriety, and non-financial misconduct can amount to a breach of our conduct rules. This is in large part due to our assertive public position on the subject.”
The FCA would be providing further guidance to the finance industry on this issue, including how non-financial misconduct should be considered within its rules, later this year.
He told MPs the regulator faces “significant challenges” when a person has been acquitted of criminal charges and the FCA must justify use of its formal powers “using the same evidence”. Mr Odey was acquitted of indecently assaulting a young female banker in 1998, after a three-day London trial in 2021.
OAM, which managed more than $4bn worth of assets before the sexual allegations were made, has since seen customers remove their funds and other businesses, including major banks, have move swiftly to cut ties with the firm.
Following the allegations, the fund manager announced that Mr Odey, will “no longer have any economic or personal involvement in the partnership”. It later revealed last month that OAM is effectively being broken up after confirming talks to offload some of its activities and staff to other asset managers, but stopped short of saying it is being wound down.
