The board of Odey Wealth Management has told clients it is “considering several options” for the business as the fallout from sexual misconduct allegations against Crispin Odey spreads through the businesses he founded.
While recent attention focused on Odey’s eponymous hedge fund, after banking partners cut ties, Odey Wealth said in a letter to its customers on Sunday that the “events of the last week have had a serious impact on our business”.
The letter, which has been seen by the Financial Times, added that the boards of Odey’s UK and Channel Islands-based wealth management operations are “considering several options for the wealth business”, without giving further details.
The UK’s Financial Conduct Authority on Monday announced restrictions on both Odey Wealth Management and Odey Asset Management, including an obligation to submit details of its bank accounts to the regulator each week and to seek regulatory approval for “extraordinary” payments above £20,000.
The FCA register also revealed that Crispin Odey’s approval to work in financial services ended on June 12 on the basis that it was “no longer required”. June 12 was the first business day after Odey’s ousting from his hedge fund. He had been approved by the FCA to offer investment advice to clients.
The FT reported on Sunday that the FCA was imposing the restrictions, to stabilise the business after a fierce backlash continued even after Odey was ousted from Odey Asset Management on June 10.
In its June 18 letter to clients, Odey Wealth directors said “many” of its service providers contacted the firm last Monday to “discuss withdrawing their services” and that “several” of its prime brokers “immediately served notice”.
Prime brokers offer lending to hedge funds that allows them to increase their potential returns, as well as derivatives that can protect against losses. “Hedge funds cannot operate effectively without the services provided by prime brokers, and this has led to actions being taken by the various fund boards,” the letter added, in the first public confirmation of the widely-reported desertion of Odey funds by their business partners.
The update also revealed that the boards of Odey European Inc and Odey MAC, two of Crispin Odey’s flagship funds which were handed to a new fund manager last week, are “monitoring the level of redemptions received”.
Five Odey funds are now listed as suspended, including one that is being liquidated. Two have been suspended “due to the weight of redemptions” and will remain suspended for as long as the funds’ boards “consider it appropriate”, and two are suspended while their directors consider their options.
Odey Wealth stressed that it had sufficient capital and that client assets were held in custody with a third-party company, Pershing.
The latest developments come after Odey Asset Management, one of London’s oldest hedge fund firms, said last week that it was in “advanced discussions” about transferring certain funds and staff to competitors.
Odey Asset Management, which oversees about $4.4bn, has tried to contain the fallout after an FT investigation this month reported allegations of sexual assault or harassment from 13 women against Crispin Odey. He strenuously denies the allegations.
In the past week banking partners including JPMorgan, Goldman Sachs and Morgan Stanley have cut ties with the group. JPMorgan was both broker and custodian to the firm.
Odey Asset Management said last week it was closing the Odey Swan fund, which was managed by Crispin Odey, and had suspended trading in four other funds, including Special Situations, Brook Developed Markets, LF Odey Portfolio and Brook Absolute Return.
Odey was removed as a partner of Odey Asset Management last week, while his holding company, Odey Asset Management Group Limited, was also removed as a member.
Odey Wealth Management declined to comment.
