Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Crispin Odey had a key part of his pay cut by 40 per cent over sexual misconduct allegations by female members of staff at his hedge fund, but only after pressure by the UK regulator, a court has heard.
Details of Odey’s remuneration were disclosed in a case the financier has brought against the Financial Conduct Authority over its decision to ban him from working in finance and fine him £1.8mn over the way he reacted to the allegations against him.
Odey Asset Management implemented the cut to Odey’s pay in early 2021 as a disciplinary measure alongside a final written warning as an alternative to dismissing him over sexual misconduct allegations by female employees, the Upper Tribunal in London heard on Thursday.
The firm’s executive committee had initially planned to deduct the costs of a law firm investigation into his behaviour from Odey’s pay, but after a challenge by the regulator, his share of annual management fees was cut from 15 per cent to 9 per cent.
The absolute size of the pay cut was not spelt out in court, but his “relevant income” for the year to November 2022 totalled £2.5mn, according to the FCA.
However, some FCA officials raised concerns that the firm’s disciplinary approach was too lenient and suspected Odey had enjoyed more favourable treatment from the committee than other employees.
Howard Cornwell, an FCA official who supervised OAM, said in a witness statement that he had emailed the watchdog’s director of supervision stating that “in my view the outcome of the disciplinary was unsatisfactory”. In another email, he said “there was evidence of gross misconduct which would normally lead to dismissal”.
“Supervision’s view was that OAM had put self-interest and the interests of the firm ahead of getting to the right outcome,” he said in a witness statement. “This was based on [its] view that OAM would not have reached the same disciplinary outcome had other staff members faced such allegations.”
Alisdair Williamson KC, a lawyer for Odey, said the decision to cut Odey’s pay showed how pressure from the FCA could change how OAM acted. “You applied pressure and they responded as a result of it — that is the truth,” he told Cornwell.
Williamson also questioned Cornwell on whether he thought there was “an old boy’s club” at OAM because the members of its executive committee were all men who had worked with its founder for many years.
Cornwell agreed this was a concern after being shown an FCA document in which he was said to believe that “OAM’s senior executives had very similar backgrounds to Mr Odey and they had worked together for a long duration. Such individuals benefited directly from working at the firm, which was inextricably linked to Mr Odey.”
The FCA has alleged that Odey, who twice fired his executive committee to stop them disciplining him over the allegations, “lacked integrity”, acted “recklessly” and breached several of its rules. It did not make any findings over the sexual misconduct allegations themselves.
OAM started to shut down in 2023 after several allegations were reported by the FT and other media. Odey denies the claims and has brought a libel action against the FT over its reporting. The case continues.