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Odey threatened to sue financial watchdog over misconduct probe

Crispin Odey threatened to take the UK financial watchdog to court if it did not drop an investigation into sexual misconduct over almost two decades at his eponymous hedge fund firm.

Odey challenged the Financial Conduct Authority’s decision to open a probe in 2021 and threatened to bring a judicial review against the regulator, according to people familiar with the matter.

The threat, which failed to stop the FCA’s investigation, underlines the financier’s aggressive methods to counter allegations about him as they accumulated over the years, a strategy that helped maintain his status at Odey Asset Management and in the City.

Fresh allegations of sexual abuse against Odey reported by the Financial Times last week led the hedge fund firm on Saturday to push Odey out of the business, but he has suggested he would fight the move.

The FCA probe has widened in the wake of the FT’s investigation, which detailed various incidents of alleged sexual assault or harassment by Odey towards 13 women over a 25-year period. Lawyers for Odey said he “strenuously disputed” these accusations.

In his challenge against the City watchdog, Odey’s legal team argued the FCA’s investigation was unlawful and that the regulator had failed to clearly demonstrate how allegations of sexual misconduct risked harming the integrity of financial markets — which the FCA has a duty to protect — according to people with knowledge of the correspondence that was sent to the regulator in December 2021.

Lawyers for Odey, who raised the legal arguments in an individual capacity rather than on behalf of his firm, also claimed the regulator was acting outside of its statutory scope, those people added. He dropped his challenge soon after, they added.

The financial watchdog opened its probe a few months earlier to examine potential misconduct at the company over an 18 year time span, from 2003 to 2021. It was examining complaints of sexual misconduct made by employees at Odey Asset Management against its founder as far back as 2004 and 2005, and then more recent complaints made in 2020.

Those familiar with the matter said Odey took issue with the nearly two-decade scope of the investigation.

Reached for comment by the FT on whether he threatened the regulator with legal action, Odey responded simply: “And?”

The FCA and Odey Asset Management declined to comment.

The FCA’s probe originally focused on potential “non-financial misconduct”, but then shifted to examine corporate governance issues after Odey fired his executive committee in late 2021, in the same month that he threatened to take the watchdog to court. He fired the committee in response to its attempt to discipline him for breaking a “final written warning” prohibiting him from behaving inappropriately with female staff. 

The watchdog, which will be questioned by MPs next month on its probe into Odey Asset Management, has a history of investigating both misconduct related to financial services and other types of wrongdoing when evaluating whether a person is fit and proper to work in financial services.

In one of the earliest such cases, the watchdog imposed a lifetime ban on a fund manager who paid £43,000 in fines for persistently dodging the train fare on his commute. In a more serious 2021 case, the FCA banned financial adviser Jon Frensham after he was convicted of attempting to meet a child who he had sexually groomed. The FCA said Frensham lacked integrity and omitted telling the regulator about his arrest and subsequent jail time.

In a memo to clients on Thursday, Peter Martin, chief executive of Odey Asset Management, wrote: “We do not recognise the picture of the firm that has been painted by the Financial Times.” He added that “OAM treats, now and in the past, all such allegations extremely seriously” and that it has “policies and procedures in place to ensure that the firm at all times complies with all of its legal and regulatory obligations”.

Odey told Reuters last week that “none of the allegations have been stood up in a courtroom or an investigation”.

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