Prime Ode Brokers Review Relationships After Allegations Of Misconduct – Sources

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LONDON/TORONTO, June 8 (Reuters) – Leading Odey Asset Management brokers including Goldman Sachs (GS.N), JPMorgan (JPM.N) and Morgan Stanley (MS.N) are reviewing their relationships with the hedge fund after Allegations The Financial Times and Tortoise Media reported sexual misconduct by their founder on Thursday, sources familiar with the matter said.

The Financial Times and the Turtle, in a joint investigation, report that 13 women allege that founder and owner Crispin Oddy, one of Britain’s best-known hedge fund managers, sexually assaulted or harassed them over a 25-year period.

“This is a restatement of an old article and none of the allegations have ever been made in a courtroom or investigation,” Crispin Oddy told Reuters by phone.

Audi was acquitted of indecent assault by a UK court in 2021. A source familiar with the situation said the British regulator, the Financial Conduct Authority, had been investigating Audi since 2021.

A spokesperson for the FCA said: “We are unable to comment on specific individuals or companies. However, we take allegations of non-financial misconduct very seriously and expect companies to have appropriate governance procedures in place to ensure allegations of misconduct are properly investigated.”

A source at one of the major brokers said the allegations of misconduct at Odey Asset Management went against their standards.

Premier brokers lend hedge funds the money they need to facilitate investments.

The Financial Times was the first to report the news of Morgan Stanley’s decision, which was independently confirmed by a source to Reuters. Another source familiar with the matter told Reuters that JPMorgan was also reviewing its relationship with Audi Asset Management, while a third source said Goldman Sachs was doing the same.

Morgan Stanley, JPMorgan and Goldman Sachs declined to comment. UBS, which also appears as Odey Asset Management’s lead broker in regulatory filings, declined to comment.

Crispin Oddy denied that master brokers were reconsidering their relationships with his firm.

“PM brokers don’t pull out! Understand about the regulator! Duty of care! They can’t. They can only do that if the company is no longer regulated, we are regulators.”

However, Audi did not respond when asked what the main brokers told him on Thursday.

In another exchange with Reuters, Audi said that “not a single investor” has contacted him to withdraw funds since the Financial Times and Tortoise Media published allegations of sexual misconduct.

Oddy, who has been a vocal supporter of Britain’s exit from the European Union, rose to prominence during the 2008 financial crisis when he amassed a fortune by shorting bank shares, an investment practice that involves betting that the share price will fall.

Reuters reported in September 2022 that Audi Asset Management had overseen around £4 billion ($5 billion) in assets.

Odey Asset Management is known for its volatile performance. Odey’s European fund is down nearly 4% this year through the end of April, after returning 151.46% in 2022, according to a note to clients from Societe Generale.

“If prime numbers go down, most companies will have to sell securities to pay off the ‘loans,’” said George Evans, president of Convergence, a data and analytics firm that tracks the alternative asset management industry.

Evans described prime brokers as the hedge fund’s “lifeblood”.

Asked about the impact on his business if prime brokers leave, Crispin Oddy told Reuters that in addition to his position that prime brokers have a duty to take care of fund investors, they are not allowed to change a fund’s margin requirements to get them. Access to leverage. Typically, if lead brokers realize that a fund’s risk is increasing or a client is no longer attractive, they may raise collateral requirements, a lead broker not involved in the Odey fund said.

The UK’s FCA specifies that financial companies have a consumer duty to retail investors. She says companies must put consumers at the center of their business and focus on delivering good customer outcomes. However, his guidance does not specifically detail the role of the master mediator.

Duncan Lamont, counsel at the law firm Charles Russell Speechlys, which represents Odey Asset Management, did not return repeated calls and emails seeking comment.

Additional reporting by Neil Mackenzie, Christine Ridley and Maya Kendan; Additional reporting by Naomi Rovnik and Carolina Mandel. Editing by Elisa Martinuzzi, Dara Ranasinghe, Megan Davies, Kathryn Evans, Sharon Singleton and Leslie Adler

Our Standards: The Thomson Reuters Trust Principles.

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