FCA CEO: Odey Threatened us With Judicial Review

In a letter to Treasury Select Committee chair Harriet Baldwin, Nikhil Rathi confirmed the FCA began investigating Odey Asset Management in 2021

Ollie Smith 6 July, 2023 | 11:19AM
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Crispin Odey

Crispin Odey's lawyers threatened the Financial Conduct Authority (FCA) with judicial review following the commencement of an investigation into his conduct, the regulator's chief executive Nikhil Rathi has said.

In a letter to the chair of the Treasury Select Committee, Harriet Baldwin, Rathi confirmed the FCA had begun investigating Odey Asset Management in "mid-2021".

Odey had originally been found not guilty of indecent assault in March that year.

Judicial review is a function of the legal system where a court can be asked to review administrative action by a public body. In England, it can result in a declaration, order, or award to a complainant.

In his response to the committee, however, Rathi said the FCA had dealt with Odey's threat of litigation "robustly".

"You ask whether the threat of litigation affects our approach. I can confirm that when we first opened our investigation, we received a letter before claim from lawyers acting for Mr Odey threatening judicial review," Rathi wrote. "We responded robustly to this.

"In the event, court proceedings were not commenced and we continued to investigate. Our investigations are well resourced, and we have significant legal expertise in-house. We can, and do, draw too on external counsel, where appropriate.

"We will of course consider legal arguments presented at any stage by those under investigation, as should any enforcement agency. However, a decision to investigate and on an investigation’s scope is driven by circumstances suggesting serious misconduct and the available evidence, without fear or favour."

The FCA's investigations into Odey and Odey Asset Management continue. The regulator is currently focusing on allegations Odey dismissed Odey Asset Management's executive committee for an improper purpose after it began investigating his conduct.

Furthermore, the watchdog is assessing whether Odey himself is a "fit and proper" person to work in financial services and whether he failed to comply with FCA conduct rules on integrity, and acting with due skill, care and diligence.

Crispin Odey effectively surrendered senior manager status at Odey Asset Management in November 2020. Though this did not put him in any way outside the regulator's perimeter for conduct supervision, it lowered both his formal responsibilities and the corresponding supervisory scope previously applicable to his role as founder and chief executive.

Following the second set of allegations against Odey in early June, Morningstar asked whether there was a tension between the judicial system, which exonerated him in 2021, and the regulatory system, which is now under renewed pressure to examine his conduct.

In the wake of the allegations, Morningstar has also been tracking the significant outflows from Odey Asset Management's fund strategies and mandates, several of which have gated. Among them is Odey's flagship hedge fund Odey European Inc.

The FCA has also placed restrictions on Odey Asset Management moving money in and out of its business accounts and funds.

Crispin Odey subsequently strenuously denies all allegations of wrongdoing published by Tortoise Media and the Financial Times newspaper.

The FCA will now give evidence to the committee in person on 19 July.

A spokesperson for Odey Asset Management declined to comment.

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Ollie Smith

Ollie Smith  is editor of Morningstar UK

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