EU funds managed by Odey Asset Management are discussing restrictions on investors’ withdrawals as part of emergency measures to contain the fallout of sexual misconduct allegations against the hedge fund manager.
It comes as the firm announced a series of management changes to funds run by Crispin Odey in advance of the market opening on Monday. The company is seeking to stabilise the business and put further distance between the firm and the financier following his ousting.
Odey Asset Management’s board on Saturday forced out Odey after the Financial Times reported that he was facing allegations of sexual assault or harassment from 13 women. The allegations have also prompted the Financial Conduct Authority, the UK watchdog, to broaden a probe into the asset manager, and some of the firm’s key banks to cut ties.
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The restrictions on investor withdrawals are under consideration because of fears that the firm may suffer high outflows in the coming days, according to two people with knowledge of the discussions. The boards overseeing its EU investment funds (known as UCITS) are exploring curbs on redemptions – a measure called “gating” – in case too many investors want their cash back at once, they said.
In a statement to clients on Sunday night, Odey Asset Management said that management of Odey’s OEI and OEI MAC – the firm’s oldest strategies and the ones upon which the hedge fund manager built his renown – would be taken over by Freddie Neave.
Fund management of the global equity strategy LF Odey Opus Fund will be taken over by James Hanbury. Oliver Kelton will take over management of the Odey Pan European Fund.
Regarding the Odey Swan Fund, the partnership is considering options to put to the fund’s board, which may include its closure. In the meantime, it will continue to be run by Neave, who co-managed it with Odey.
The company added that it planned to “announce a complete rebrand of the partnership in the near future”.
Odey Asset Management said it continued to be regulated by the FCA, with which it has “been in regular communication ... throughout this process”. It added that it had been “in constructive dialogue over the weekend with our key counterparties, including the prime brokers”.
Odey Asset Management’s UCITS strategies include two of the Odey funds reallocated to new managers, the £100 million (€116 million) Dublin-based Odey Swan Fund and the £20 million Odey pan-European Fund. The funds could not immediately comment on possible restrictive measures.
The UCITS boards are independent from Odey Asset Management and their obligation is to the funds’ underlying shareholders. Gating is a common response to destabilising redemption demands. It has recently been invoked by some UK property funds because of tough market conditions.
Odey Asset Management has about $4.4 billion (€4.1 billion) of assets under management in total and could also decide to impose restrictions on other funds if necessary to protect investors, the people said. Odey Asset Management declined to comment.
The FCA declined to comment. A person familiar with the situation said gating was generally a matter for the funds themselves, not their regulator.
On Thursday, Morgan Stanley, one of Odey Asset Management’s biggest prime brokers, moved to cut ties with the business. It declined to comment on Sunday whether it would revisit that decision given the subsequent changes within the firm. Prime brokers are critical for hedge funds because they offer leverage, manage their trades and allow them to hedge their risk.
JPMorgan, another of Odey’s key banking relationships, continues to “review” the situation, said a person familiar with the bank’s position. “We have to consider ...[Saturday’s] new info so that will be part of our review,” the person said. “The fact that we have prime [broking] and custody when other banks do not means we have more to consider.”
Peter Martin, Odey Asset Management’s chief executive, and Michael Ede, chief financial and operating officer, said on Saturday that Odey would “no longer have any economic or personal involvement in the partnership”.
Odey stepped back as the firm’s co-chief executive in November 2020, four months after he was charged with indecent assault of a junior bank employee. He was found not guilty the following March. The FT reported on Thursday that 13 women alleged that Odey had sexually assaulted or harassed them in various incidents over a 25-year period.
In a separate statement on Saturday, Odey Asset Management said it had “been investigating allegations concerning Mr Odey,” without elaborating.
A law firm representing Odey previously said allegations made against him were “strenuously disputed”. Odey said last week that “none of the allegations have been stood up in a courtroom or an investigation”. – Copyright The Financial Times Limited 2023
