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The UK’s largest financial regulator is pressing investment platforms including AJ Bell, Hargreaves Lansdown and Halifax in their continued offer of funds from Odey Asset Management to retail investors, people familiar with the situation told the Financial Times.
A series of funds has already been suspended in the fallout from allegations of sexual misconduct against the hedge fund firm’s founder, Crispin Odey.
The allegations led to his dismissal from the company he founded in 1991 and prompted banks that provided key services to the hedge fund to sever ties. He strongly denies these allegations.
Odey Asset Management, which managed about $4.4 billion before the scandal hit, is on its way to unraveling itself by selling the funds, and the company remains the subject of a two-year investigation by the Financial Conduct Authority into corporate governance issues.
According to people familiar with the situation, FCA has approached investment platforms this month about its continued offering of funds branded as Odey, or Under Brook, the name given to funds managed by other partners at Odey Asset Management, including Oliver Kelton and James Hanbury. .
One person familiar with the discussions said the FCA wanted investment platforms to make it clear how continuing to provide funds was in the best interests of their clients, given the problems at Odey Asset Management.
Audi Asset Management declined to comment.
Risks for retail investors – who may not have heard of Odey Asset Management’s difficulties – include further suspensions and potential restrictions on withdrawals.
A person at an investment platform said there had been a “conversation” with FCA about the continued existence of Odey-linked funds but that the regulator was not “challenging” the platform’s approach.
A person at another platform said that while the funds were on offer, their platform had not sold a single Odey investment since the FT first reported the allegations against Crispin Odey on June 8. “These are relatively specialized funds and very few clients hold them,” the person added.
A fourth said that their platform did not remove the funds because there was a “protocol” for taking the funds offline. This was not triggered “because (FCA) is (is) monitoring the situation, (is) keen on stability and will advise us and other platforms on next steps”.
The platforms offer money on a supermarket-style platform where DIY investors can pick and choose their properties, rather than promoting or recommending them, which means investors have to look for them to buy them.
FCA’s talks with the platforms have been broader than the question of why Odey and Brook’s money is still available to buy, according to several people familiar with the situation.
The watchdog has also requested information on the level of buying and selling of funds, and has spoken to the platforms about the orderly transfer of any funds sold by Odey Asset Management to third parties.
FCA, Halifax, Hargreaves Lansdown and AJ Bell all declined to comment.
Odey Asset Management said this week it was in “advanced talks” about turning four Kelton-managed funds into boutique investment SW Mitchell Capital. Odey Asset Management is also trying to move some other funds and portfolio managers to new owners.
