• Fri. Dec 8th, 2023

Odey Asset Management freezes funds as clients pull money, prime brokers flee

LONDON, June 13 (Reuters) – Odey Asset Management (OAM) is closing one fund and restricting money clients can pull from another, two investor letters showed, just as the hedge fund was scrambling on Tuesday to keep its prime brokers from ending vital relationships with the firm.

These developments follow allegations of sexual misconduct by its founder, Crispin Odey, reported by the Financial Times and Tortoise Media last week. Odey denies the allegations.

Odey Asset Management has closed its Odey Swan Fund and is restricting the money clients can pull from its Brook Developed Markets Fund, according to investor letters seen by Reuters.

Also on Tuesday, the FT reported that JPMorgan , one of three prime brokerages that offer vital leverage for the hedge fund, had served notice on its service agreements, cutting ties with OAM. A source familiar with the matter told Reuters on Saturday that Goldman Sachs (GS.N) had also served notice on its service agreements with OAM funds.

JPMorgan and Goldman Sachs declined to comment. Morgan Stanley also declined to comment on Tuesday as to whether it had decided the same.

In the letters, both dated June 12, and seen by Reuters on Tuesday, the OAM board said it took the decision to close the Odey Swan Fund and gate the Brook Developed Markets Fund after it faced “redemption requests in excess of ten per cent of the net asset value,” prompting the company to restrict more withdrawals.

The board of Odey Asset Management also decided to suspend the issue, conversion and redemption of Swan Fund shares in order to “efficiently manage the redemptions and in the best interests of Shareholders,” the investor letter showed.

An OAM spokesperson declined to comment but confirmed the letter about the Brook Developed Markets Fund and was not immediately available to respond to a request about the closure of the Swan Fund. OAM said on Monday it wasn’t considering imposing exit restrictions on any of its funds.

Crispin Odey has denied the allegations of misconduct, which were jointly reported by the Financial Times and Tortoise on Thursday.

He did not respond when contacted by Reuters on Tuesday about either the Brook or Swan fund.

It is the responsibility of a fund’s board to protect other retail customers from the falling value of a fund if there is a rush of investor exits.
Brook Developed Markets Fund is open to retail investors and had about $216 million, as of the end of February, the latest data from Morningstar showed.

OAM over the weekend sought to distance itself from Crispin Odey, saying the financier would be leaving the firm.

In a letter to investors signed by the firm’s partners and seen by Reuters the firm set out a succession plan, including naming replacement managers for key funds, as the firm sought to end “personal and economic involvement” with Crispin Odey.

OAM had $4.8 billion in assets under management as of September 2022.

Reporting by Nell Mackenzie; Editing by Dhara Ranasinghe, Elisa Martinuzzi and Susan Fenton

Our Standards: The Thomson Reuters Trust Principles.


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