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Barclays is looking to terminate its corporate banking relationship with Odey Asset Management, people familiar with the situation told the Financial Times, heaping further pressure on the hedge fund as it struggles to stay afloat following sexual misconduct allegations against its eponymous founder.
A string of banks served termination notices on Odey Asset Management for the prime broking and custody relationships necessary to run a hedge fund after the FT reported last month that 13 women had alleged sexual assault or harassment by Crispin Odey.
Those notices remain in place despite Odey being ousted within days of the allegations being published. The hedge fund’s 64-year-old founder was previously acquitted of indecent assault and strenuously denies the latest sexual misconduct claims.
Odey Asset Management, which oversaw investments worth around $4.4bn before the allegations broke, announced last week that two of its star managers were in advanced talks to move their funds and that other deals were under discussion.
Three people familiar with the situation told the FT that Barclays, Odey Asset Management’s corporate bank, had become the latest to resolve to terminate its relationship with the hedge fund, following JPMorgan, Goldman Sachs and Morgan Stanley, who have already cut ties with the 32-year-old firm.
The bank has told the Financial Conduct Authority it wants to extricate itself from Odey Asset Management, two of the people said. One of them added that the process would have to be carefully managed because Barclays administers processes such as Odey Asset Management’s payroll, which it cannot simply walk away from.
Odey Asset Management declined to comment on whether the hedge fund had been notified of Barclays’ intentions, and whether it could carry on business in the longer term without a corporate banking partner. Barclays declined to comment on its relationship with the hedge fund.
While Odey Asset Management has told clients it is making efforts to sell some funds because of the impact of “recent events”, it has not publicly said it is winding down its business.
Hedge fund winddowns, which can take several months, can be enacted without any change to their registration status, a person familiar with the regulatory situation told the FT. If a company becomes insolvent, that would trigger a formal process including the possible appointment of a special administrator.
As well as losing its main banking partners and star fund managers, and suspending several funds, Odey Asset Management remains the subject of a two-year-old investigation by the FCA into corporate governance and other issues at the firm.
That investigation can continue even if Odey Asset Management is wound down, although any recourse from the FCA would be limited to publishing adverse findings and censuring any individuals who were found to have failed in their duties.
The FCA has precedent in making findings against individuals no longer active in the financial services industry, including the 2014 ban against Jonathan Paul Burrows, who had already stepped down as a managing director at BlackRock Asset Management when he was censured for serial evasion of paying for his train fare.
The FCA has not publicly commented or confirmed the investigation into Odey Asset Management but has been asked to explain its dealings with the firm at a hearing by the Treasury select committee later this month.
Harriett Baldwin, chair of the TSC, told the FCA she would like to hear from them on the “nature and intensity” of their supervision of Odey Asset Management over the past five years, including how the regulator handled any concerns flagged about Crispin Odey.
Additional reporting by Jane Croft