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Barclays is considering ending its corporate banking relationship with Odey Asset Management, according to insiders speaking to the Financial Times. This move further compounds the challenges faced by the hedge fund, which is struggling after allegations of sexual misconduct against its founder, Crispin Odey.
Following the publication of a Financial Times article last month, where 13 women accused Crispin Odey of sexual assault or harassment, multiple banks have issued termination notices for prime broking and custody relationships necessary for running a hedge fund.
These termination notices remain in effect despite Crispin Odey being ousted shortly after the allegations became public. The 64-year-old founder of the hedge fund was previously acquitted of indecent assault and vehemently denies the recent sexual misconduct claims.
Odey Asset Management, which previously managed investments worth around $4.4bn, recently announced that two star managers are in advanced negotiations to transfer their funds, with other deals also being discussed.
Insiders revealed that Barclays, serving as Odey Asset Management’s corporate bank, has decided to end its relationship with the hedge fund, following in the footsteps of JPMorgan, Goldman Sachs, and Morgan Stanley, who have already severed ties with the 32-year-old firm.
According to two sources, Barclays has informed the Financial Conduct Authority of its intention to separate from Odey Asset Management. This process requires careful management because Barclays handles essential processes such as the hedge fund’s payroll.
Odey Asset Management declined to comment on whether it has been notified of Barclays’ intentions or if it can continue its business long-term without a corporate banking partner. Barclays also declined to comment on its relationship with the hedge fund.
While Odey Asset Management has informed clients of efforts to sell some funds due to the impact of recent events, there has been no public statement regarding the winding down of its business.
A person familiar with the regulatory situation explained to the Financial Times that hedge fund winddowns can take several months and may not require changes to their registration status. If the company becomes insolvent, it could trigger a formal process, potentially involving the appointment of a special administrator.
In addition to losing main banking partners and star fund managers, and suspending several funds, Odey Asset Management is currently under investigation by the FCA for corporate governance and other issues at the firm, a probe that has been ongoing for two years.
The investigation can continue even if Odey Asset Management winds down, although any action from the FCA would likely be limited to publishing negative findings and reprimanding individuals found to have neglected their duties.
The FCA has previously made findings against individuals who are no longer active in the financial services industry, like the case of Jonathan Paul Burrows, who was banned in 2014 for evading train fare payments while already having stepped down as a managing director at BlackRock Asset Management.
While the FCA has not publicly acknowledged or confirmed the investigation into Odey Asset Management, the Treasury select committee has requested an explanation of the regulator’s dealings with the firm during a hearing later this month.
Harriett Baldwin, chair of the TSC, expressed interest in hearing from the FCA about the nature and intensity of their supervision of Odey Asset Management over the past five years, including how they handled any concerns raised about Crispin Odey.
Additional reporting by Jane Croft
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