FCA lays out scale of investigation into Crispin Odey

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The Financial Conduct Authority has defended its “intensive” oversight of Odey Asset Management in its first public confirmation of its investigation into the troubled hedge fund group and its founder, Crispin Odey.

The UK’s top financial regulator had previously declined to make any public statement on the affair since the Financial Times published on June 8 allegations of widespread sexual misconduct by Crispin Odey. The FCA’s silence prompted the Treasury select committee to send the watchdog a written request for information on June 14.

In a response to the committee published on Wednesday, FCA chief executive Nikhil Rathi said that “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”.

Rathi will give evidence in front of the committee on July 19 when more scrutiny of the FCA’s investigation is expected.

The investigation into Crispin 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. Crispin Odey fired the hedge fund’s executive committee in 2021.

The FT last month reported that 13 women alleged they had been sexually harassed or assaulted by Crispin Odey over a period spanning more than two decades. He strenuously denies the allegations. The claims prompted key banks to move to sever ties with Odey Asset Management, which is now breaking itself up, and caused partners at the firm to defenestrate its founder.

Crispin Odey has already been removed from the FCA’s register of people approved to work in financial services after he was ousted by the hedge fund, but he could be banned from future financial services roles if the FCA makes an adverse finding against him.

Odey Asset Management declined to comment and Crispin Odey did not immediately respond to a request for comment.

Rathi said the FCA had been in contact with the police in relation to the “potentially criminal” nature of the allegations, and that parliament could “legislate if it wished” so that “certain offences should lead to an automatic prohibition from a regulated sector”.

The FCA believed that such “non-financial misconduct” could create a “sufficient risk” to justify censure, he told the committee. But Rathi highlighted a previous case to the committee, where the Upper Tribunal that hears challenges to FCA decisions ruled that the regulator could not ban an individual based purely on his conviction for child sexual grooming, and instead could only bar him for failing to disclose the conviction to the FCA.

The FT reported last month that Crispin Odey previously threatened the FCA with a judicial review over its investigation into him, in part because he said it was acting outside of its regulatory scope.

Rathi confirmed the legal challenge on Wednesday. “We responded robustly to this. In the event, court proceedings were not commenced and we continued to investigate,” he said.

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”.

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. 

The FT reported that the FCA was considering expanding its investigations in light of the sexual misconduct allegations.

“It is important to note the nature and scope of investigations can change and it is vital we do not limit them,” Rathi said in the letter.

Simon Morris, a lawyer at CMS who is not involved in the case, said: “The FCA has to prove its case, and it seems that even after two years’ investigation it hasn’t come up with the evidence to show [Crispin Odey] lacks integrity for reasons of his personal conduct.”