The Financial Conduct Authority (FCA) has announced its decision to fine the hedge fund millionaire Crispin Odey £1.84 million and ban him for life from the UK financial services industry for a lack of integrity.
The FCA considers that he deliberately sought to frustrate disciplinary processes at Odey Asset Management (OAM) into his conduct to protect his own interests.
The City regulator said Odey, who founded OAM, showed “reckless disregard” for OAM’s governance, causing the hedge fund to breach regulatory requirements.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA said: “A culture of silence in which allegations of misconduct are not dealt with effectively can put consumers and markets at risk. Mr Odey repeatedly sought to evade and obstruct efforts to hold him to account. His lack of integrity means he deserves to be banned from the industry.”
Odey has referred the FCA’s decision notice to the Upper Tribunal, a court that deals with appeals against regulatory decisions, where he and the FCA will present their cases. The FCA said its findings are therefore provisional and reflect the FCA’s belief as to what occurred and how it considers his behaviour should be characterised.
Crispin Odey: FCA decision
Odey, who became well known for his links to the Brexit campaign and the Conservative party, is alleged to have sexually harassed or assaulted 13 women.
The allegations, which Odey has strongly denied, spanned the years 1998 to 2021, with eight women alleging sexual assault, and were first reported by the Financial Times in June 2023.
The FCA considered that Odey’s behaviour towards both OAM and the FCA “lacked candour” and found his conduct demonstrated that he is “not a fit and proper person” to perform any function related to regulated activities.
Removing members of OAM’s executive committee
In February 2021, after an internal investigation by OAM, Odey received a final written warning from the hedge fund’s executive committee (ExCo) in relation to inappropriate behaviour.
In November 2021, OAM scheduled a disciplinary hearing to consider whether Odey had breached the final written warning. However, on 24 December 2021, Odey used his majority shareholding in the hedge fund to remove OAM’s ExCo members and appoint himself as the sole member.
He subsequently decided on 6 January 2022 that the disciplinary hearing into his conduct would be indefinitely postponed since he said he was unable to conduct it with impartiality.
Odey appointed new ExCo members and resigned from the committee on 12 January 2022.
A further allegation of non-financial misconduct was brought to the attention of OAM’s ExCo on 3 March 2022. This related to an alleged breach of the final written warning requirements that Odey should not touch another member of staff (unless shaking hands in a professional context) and should not talk about members of staff or others inappropriately.
The allegation dated back to 17 March 2021, a few weeks after Odey had signed the final written warning. He allegedly held the hand of a future OAM employee during an office tour, and had an inappropriate conversation which took place over lunch.
On 21 March 2022, OAM confirmed to the FCA that this further allegation would be included in the existing internal investigation relating to other alleged breaches of the Final Written Warning.
Odey stated, at a meeting with the ExCo on 23 March 2022, that if it made an adverse finding against him, he would “close the firm, litigate personally against members of the ExCo and remove insurance cover so that ExCo members could not use this to finance their defence”.
‘HR law does not matter here’
As a result of this additional allegation, the new ExCo members and OAM’s Compliance Officer discussed safeguarding measures to protect staff pending the outcome of the investigation.
Measures included proposals that Odey work remotely, or that he be separated from staff in OAM’s offices. When Odey heard these proposed measures, he expressed his disapproval and stated he thought that the ExCo had been unduly influenced by the FCA.
He refused to work remotely or to be separated from staff. On 28 March 2022, at a meeting with the ExCo in which the proposed safeguarding measures were discussed, the FCA found that Odey demonstrated disregard for OAM’s policies and procedures, and for the ExCo’s responsibilities to uphold standards of conduct among its senior figures towards female members of staff.
Odey stated that “HR law did not matter here” and that he would only accept a finding by the FCA. He also called one ExCo member, who had explained to him that the safeguarding steps were important, “fucking spineless”. Following these exchanges with him, the safeguarding measures were not implemented, the FCA found.
Following disagreement about how to proceed with the disciplinary hearing, on 31 March 2022 Odey again removed OAM’s ExCo members and appointed himself as the sole member of ExCo. Odey retained his position on the ExCo until he appointed two new ExCo members in July 2022.
OAM’s disciplinary hearing was eventually held on 29 November 2022, nearly a year after it had been originally scheduled.
On 13 December 2022, OAM issued an outcome letter to Odey which set out its findings that, whilst Odey had technically breached the final written warning in two instances, those breaches did not constitute substantive breaches or inappropriate conduct which could reasonably be considered harassment.
The ExCo required Odey to undertake further compulsory training and subjected him to a one-year management embargo. The terms of the original final written warning were continued but without prescriptive examples of behaviour and with a time limit of 12 months, which was subject to review.
In its decision notice issued to Odey earlier this month, the FCA found that even though Odey eventually allowed ExCo to proceed with the second disciplinary hearing, his actions from December 2021 onwards meant that the credibility and effectiveness of OAM’s governance structures were significantly weakened because Odey had shown he was “prepared to override them at will if he did not agree with the decision”.
OAM is currently in the process of winding down and is no longer authorised by the FCA.
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