Odey Asset Management suspends flagship hedge funds

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Odey Asset Management has suspended two of its hedge funds after investors sought to pull money following revelations of sexual misconduct allegations against founder Crispin Odey.

Odey European Inc, the firm’s flagship fund, and OEI Mac have had a high volume of redemption requests, prompting Odey Asset Management to suspend them, according to two people close to the firm.

In a letter to clients last week, the boards of the funds said they were “monitoring the level of redemptions received”, they said. Odey Asset Management declined to comment.

The suspensions come after Crispin Odey was removed from managing the funds earlier this month in the wake of the allegations reported by the Financial Times. Odey has strenuously denied the allegations.

The group’s banking partners, including Goldman Sachs, JPMorgan and Morgan Stanley, have severed ties with the firm. These prime brokers provide hedge funds with lending to boost returns and derivatives to protect against losses.

Odey Asset Management has also been forced to suspend a number of other funds as clients have rushed for the exit.

Over the past couple of weeks, the firm has halted trading in Special Situations, Brook Developed Markets, LF Odey Portfolio and Brook Absolute Return. The Odey Swan fund, in which trading has been stopped, is being wound down.

Fund suspensions are aimed at providing managers with time to sell assets in an orderly fashion to meet redemption requests so that investors are not left nursing steep losses from fire sales.

The latest emergency measures come as the firm said it was in “advanced discussions” to transfer certain funds and staff to rival groups, although it has not named the other parties. Odey Asset Management, founded by Odey in 1991, manages about $4.4bn.

The firm has been selling down stakes in a number of stocks over the past couple of weeks, including currency printer De La Rue, in an attempt to meet the higher volume of withdrawal requests.

Filings show the asset manager sold 6 per cent of auto dealership Pendragon this month, reducing its stake to 4 per cent, as well as 2 per cent of The Restaurant Group. Odey Asset Management reduced its holding in small-cap stock Advanced Oncotherapy.

Mike Ashley’s Frasers Group acquired Odey Asset Management’s 20 per cent stake in electronics vendor AO World, while investment trading business Plus500 bought back £101mn of its own shares from the asset manager.

The UK’s Financial Conduct Authority announced restrictions last week on both Odey Wealth Management and Odey Asset Management, including an obligation to submit details of its bank accounts to the regulator each week and to seek regulatory approval for “extraordinary” payments above £20,000.

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