Crispin Odey Accused of Ethical Breaches in FCA Legal Battle
Disgraced hedge fund manager Crispin Odey repeatedly violated ethical norms in his attempts to prevent a disciplinary hearing into alleged misconduct, the Financial Conduct Authority told a court on Tuesday. The legal battle between the City watchdog and Odey, in which the financier is fighting to overturn his £1.8 million fine and ban from financial services, commenced on Monday.
Odey's Defense and FCA's Counterarguments
In documents submitted to the court, Odey maintained that the actions he took as majority owner of hedge fund Odey Asset Management were ones he was fully entitled to take. He dismissed two members of his executive committee prior to a disciplinary hearing, believing they would not conduct the process fairly. Odey's team argued that had he not taken these actions, the committee members would have incorrectly and unjustly reached the conclusion that they had no option but to dismiss him, leading to the closure of the firm.
They claimed his actions were reasonable in the circumstances and that any risks or harm arising were outweighed by the detriment it could have caused the hedge fund, its staff, and clients. However, the FCA argued to the court that Odey used his powers as the majority shareholder to summarily dismiss the firm's executive committee and appoint himself as the sole member to prevent the disciplinary hearing.
The watchdog criticized this move as a serious step that plunged the firm deeper into a regulatory and governance crisis. It resulted in the resignations of two of the three members of the dismissed executive committee, including chief executive officer Tim Pearey, head of research Lord Massey Roborough, and, in due course, head of compliance Jack Satt.
Allegations of Unethical Behavior and Historical Misconduct
In court, the FCA's lawyers said Odey had taken an egregiously unethical position by using his powers to sidestep governance structures at Odey Asset Management, claiming he showed a reckless disregard. They went on to claim Odey demonstrated disrespect for members of the executive committee.
The court also heard that an employee of Simmons & Simmons, the law firm appointed to investigate Odey's behavior in September 2020, had told the FCA that he had touched female staff members without their consent. The Simmons & Simmons report identified at least 46 historical allegations of inappropriate conduct by Odey toward female employees between 2003 and 2020.
This includes an allegation of sexual assault on a female employee at the firm's premises. Incidents described to the court involved Odey allegedly giving staff members massages, including one instance where he gave a staff member a shoulder massage before groping her breasts. Another incident described Odey allegedly asking a female member of staff to try on a skirt he bought for his daughter.
Impact on Staff and Upcoming Trial Proceedings
The FCA claimed staff members, in particular junior members, were not confident to speak up or escalate concerns due to not wanting to ruffle feathers. A letter to Odey from Odey Asset Management seen by the court said that Odey's conduct had resulted in certain inappropriate behavior towards female members of staff being perceived as normal or acceptable by some staff members.
During the three-week trial, set to conclude on 26 March, numerous former senior members of Odey Asset Management are expected to testify. Odey himself is scheduled to appear from 24 to 26 March and face more than 12 hours of questioning, as the case continues to unfold in the financial regulatory spotlight.
