Odey Was Cleared of Sexual Assault. Now Other Accusations Emerge
Yet even for Britain’s most visible hedge fund manager, the recent public scrutiny has been blistering. The 62-year-old has been battling accusations that he sexually assaulted a young banker more than two decades ago after inviting her back to his apartment. Odey said in a U.K. court that the claims were a “horrible slur,” and maintained his innocence -- while accepting that he told her he hoped the evening may end up with them in bed together.
Odey this month was acquitted of the assault charges, a verdict that offers him some relief as he turns to rehabilitating a reputation that has been marred by the allegations as well as his worst investment streak. But new accusations against him are now surfacing, threatening a reckoning for the $3.3 billion investment empire that he started more than three decades ago.
Two other women have come forward to Bloomberg News with claims about Odey’s behavior: one is a former receptionist at his firm, who says Odey ran his hand down her back when she was at work, and the other a client who was asked by Odey to be his mistress during the course of a business dinner more than a decade ago, according to people familiar with the matter. That’s in addition to a separate assault allegation reported on March 14 by the Sunday Times, which cited an interview with an unidentified woman who said Odey groped her when they dined together in 2008.
A law firm representing Odey and his firm said in a written statement that the allegations are “strenuously denied.” A spokesman for Odey also denied the accusations made in the Sunday Times.
Interviews with more than a dozen people who’ve had dealings with Odey or worked at his firm offer a window into how the money manager has consistently pushed the boundaries of traditional norms – a trait that powered his ascent to the top ranks of hedge funds. But now the firm he founded is on the cusp of lasting change: Odey Asset Management is taking steps to cease being as synonymous with the man, including carving out a separate unit that’s being re-branded with a new name.
“This case may have found Mr. Odey not guilty of a crime under law, but his own testimony does highlight perhaps a blind spot in his judgment,”said Bev Shah, founder of City Hive, an advocacy group in London that promotes diversity in the investment management industry. “Where previously ‘star’ fund managers with their name above the door would enhance a brand to pull in assets, it now seems to pose a bigger downside risk.”
Odey came of age in an era that saw numerous hedge fund managers become inextricably linked with the businesses they founded. That era is rapidly drawing to a close as many firms have discovered firsthand the perils of being too closely tied to one person. Firms started by Dan Och and Steve Cohen are among those that have reinvented themselves after missteps and scandals that threatened to erode their standing with investors. In some cases, such decisions have been purely pragmatic: hedge funds need to outlive their greying founders.
In Odey’s case, his legal travails coincided with his worst slump on record. During the longest bull market run in history, he stuck to a bearish stance that contributed to an almost 70% loss over the past six years through December. Even with a 51% gain in the first two months of the the year, he still needs to generate 100% return for investors from there just to recoup losses since the start of 2015.
Many investors fled as his fund seesawed between sharp declines and short-lived gains. His firm’s assets are down by more than three-fourths from the $13 billion he managed in his heyday.
“Reputation and brand are extremely important in the hedge fund industry,” said Don Steinbrugge, head of Agecroft Partners that helps hedge funds raise money. “Going through a period of significant decline in assets and a negative return over five years significantly hurts their perception in the marketplace.”
Odey is part of an elite coterie with links to some of the oldest and most powerful dynasties in the U.K. His grandfather was a Tory MP; his mother hailed from a storied mercantile family; his wife Nichola Pease is a member of one of the founding families behind Barclays Bank. Odey was also briefly married in the 1980s to Prudence Murdoch, Rupert Murdoch’s eldest daughter. He is well known as a top fundraiser for Nigel Farage, the global face of the U.K. campaign to exit the European Union.
He cemented his reputation as one of the earliest investors to spot the last financial crisis, profiting from shorting stocks in the run-up to the sell-off in 2008. Along the way, he became known for his distinctive investment style, loading up on contrarian bets that can leave investors with asymmetric gains or losses and openly scoffing at the notion that money managers should hedge their risks.
Critics say he loads up on directional bets with little or no regard for diversification or risk controls, tenets that define modern day investing. He can be dismissive of dissenting views. In one previously reported incident during 2008, when a representative of a family office questioned his risk management, Odey told him he was just another “crappy” investor and later called him a “jerk.”
In many ways, the firm that Odey built is a relic from another time, standing out in an industry that’s been slower than most to adapt to changing workplace norms.
The firm, whose investing operations are run out of a Georgian town house in London’s Mayfair district, is dominated by men, especially at the top ranks. The 18 or so senior portfolio managers and research analysts at the firm are all male, according to the firm’s website. That makes it an outlier even in an investment industry with a poor track record of diversity: women managed just £44 billion ($61 billion), or around 9.3%, of roughly £475 billion of U.K. funds analyzed by Morningstar Inc.
The 11-person management team at Odey includes just one woman, who is the firm’s general counsel. Mostly, the women at Odey’s firm have jobs in office support, administration and marketing.
At times, Odey himself displays an outdated view of the world. In a July commentary sent to investors, the University of Oxford alumnus bemoaned the unwillingness of governments to allow recessions to happen and pointed to a “feeling that coloured people are victimized,” using a term for non-White people that’s widely considered derogatory and offensive. Odey didn’t respond to requests for comment on his use of the term.
At a dinner more than a decade ago in London, Odey offered his client the use of his flat, all expenses paid, if she agreed to be his mistress, according to people familiar with the situation, who asked not to be identified discussing a private matter. The investor turned down Odey’s proposal, but he continued to call her office for days after to try and change her mind, the people said.
A woman who worked as a receptionist at Odey’s firm, who asked not to be identified because she fears retaliation, said Odey on one occasion inappropriately touched her when she was alone at her desk in the office, running his hand down her back and expressing his surprise that she was wearing a bra.
On a separate occasion, after Odey made a crude sexual remark about her relationship with her boyfriend, she reported the incidents to the human resources department, she said in an interview with Bloomberg News. She was thanked for coming forward, but she never heard from HR again. The woman left the firm soon after, she said.
In the incidents involving both the client and the receptionist, Odey has not been accused of using any force nor committing any crime and both individuals didn’t pursue the matter. Both shared the incidents in real time with co-workers and partners, who separately corroborated the accounts when reached by Bloomberg News.
Odey’s representatives emphatically denied the allegations.
In an interview with the Sunday Times, another woman said that Odey groped her while the two were dining in a London restaurant in 2008, trying to touch her even after she pushed him away.
The woman had contacted the police about the incident last summer and offered to make a statement so her accusations could be linked to Odey’s court case. She was told her evidence would only be accepted if she were willing to bring her own case, she said. She was eventually interviewed by three different police officers, but she said she received conflicting advice and that the police were “geared towards putting the victim off,” she told the newspaper. Odey has denied the allegations.
In the court case where Odey was acquitted, the money manager was alleged to have invited a woman, who was in her 20s at the time and worked at an investment bank that counted Odey’s fund as a client, to his Chelsea home. He changed into a dressing gown, then proceeded to “launch himself” at her, a lawyer for the prosecution said at Westminster Magistrates Court in September.
While Odey acknowledged that his intentions weren’t entirely honorable, he said he never assaulted the woman. “I’m embarrassed to say that if she’d gone along with it, I’d have gone further,” he said in court. “The only thing I was sorry about was how uncomfortable she felt,” Odey said in his testimony.
After hearing inconsistent testimony about the summer evening more than 20 years ago, the judge said he couldn’t be sure of the woman’s account.
“Despite the strength of her emotion and tears, her credibility has been thrown into question and her evidence is riddled with inconsistency,” the judge said of his decision to acquit Odey. Odey, he said, would leave the courtroom with his “good character intact.”
As Odey tries to move on from the trial, one of his biggest challenges is holding on to his remaining investors. Many large institutions have exited Odey’s funds after bouts of volatility have been too wrenching for them to stomach.
The pool of money Odey personally manages has shrunk over time, to roughly $777 million at the end of last year, according to an investor letter seen by Bloomberg. The bulk of the firm’s funds are now run by other portfolio managers, and at least seven pools have already dropped Odey’s name and housed within a new entity called Brook Asset Management. Among them are funds managed by James Hanbury, Oliver Kelton and Tim Bond, who run portfolios that invest in Europe and other global markets.
|Returns for 2020|
|Brook Absolute Return Focus (James Hanbury)||46.2%|
|Odey Special Situations (Adrian Courtenay)||42.8|
|LF Brook Absolute Return (James Hanbury)||29.1|
|Brook European Focus Absolute Return (Oliver Kelton)||9.7|
|Odey Odyssey (Tim Bond)||-7.9|
|Odey European Inc. (Crispin Odey)||-30.5|
Odey is counting on a base of loyal backers to stick with him. The investors left in Odey’s pool are mostly individuals and friends with long time horizons to wait out the current slump. To an extent, a more resilient base of investors insulates Odey from another round of client withdrawals.
Among Odey’s investors is Adrian Flook, a former member of Parliament in the U.K. Flook, whose investments have suffered of late, doesn’t want to get out now because doing so would lock in his losses with no chance of a potential turnaround.
Flook, a fellow Conservative Party supporter, said his decision to stay invested with Odey is as simple as this: losing money “once is unfortunate, twice would be foolish.”
Still, one thing is clear. Odey’s firm has been irrevocably reshaped as he cedes more control to a new generation of managers who’ve made money as their boss has seen his fortunes slump. Odey has taken a step back from running the firm, relinquishing his role as co-chief executive office so he can focus solely on managing client funds.
By Odey’s own admission, he can withstand long periods of pain. In one interview in 2018, Odey likened his staying power to George Soros, the famed money manager who decades ago was credited with breaking the Bank of England with a short bet on the pound.
“I quite like that,” Odey said at the time. “I think I can remain at an uncomfortable place for a very long time and ultimately that is quite valuable.”
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