The working environment that continues at Odey Asset Management has been described as a “major governance failure” as the company closes following a wave of sexual harassment allegations against founder and CEO Crispin Odey.
It is believed that a culture of silence in the financial services industry over sexual misconduct has allowed such alleged abuses to continue at Odey AM for 30 years. They only came to light when thirteen women came forward to denounce the hedge fund manager’s behavior Financial times newspaper from five months ago. Since then, seven more women have made accusations against Odey. He denies many of the claims.
Following the allegations, the company, which Odey, 64, founded in 1991, announced on its website on Tuesday (October 31): “Odey Asset Management, including Brook Asset Management and Odey Wealth, will close. Fund managers and funds have switched to new asset managers.”
Leading responsible investment asset managers have declined to address the governance situation at Odey Asset Management following news of its impending closure.
The heads of stewardship and sustainable and responsible investing at Fidelity International, Schroders, Credit Suisse, Amundi and Robeco all declined to comment on the role of governance at the company. Pictet, Rathbones and M&G did not respond to a request for comment.
The head of global industry standards at the CFA Institute, which “aims to promote standards of ethics, education and professional excellence in the global investment services industry,” also chose not to comment on the matter, just as asset manager AJ Bell.
‘Large-scale failure of governance’
One investment professional who wanted to speak out, Gemma Woodward, head of responsible investing at Quilter Cheviot Investment Management, and ESG clarity Member of the EU Commission, says “looking at the Odey situation [you] I see very clearly that there was a huge failure of management.”
“To the extent that people ignored the problem and did not think Odey’s behavior could or would be addressed and therefore the emphasis was on changing other behavior.”
According to reports, Odey was allowed to do whatever he wanted in the office and women were told to change their behavior to avoid him, such as not sharing a lift with him and taking the stairs instead, and not being alone in a room with him . the hedge fund manager.
“In any governance structure that works, there are, or should be, checks and balances – the CEO, the chairman, the senior independent director, etc. – so that no one person is all-powerful,” says Woodward.
“This can be more of an issue with a ‘star’ who has set up shop and therefore dictates the culture and structure that makes it harder to challenge them.”
According to analytics firm S&P Global, the purpose of the company, the role and composition of boards of directors, and the compensation and supervision of top executives have become core issues in companies’ corporate governance structures.
Karin Pasha-Huizinga, responsible investment at Colesco, a private credit specialist, says that good governance “is more of a facilitating and precondition and not a goal in itself. [unlike the E and S in ESG]”.
To limit the kind of excesses reported at Odey, companies must “make sure you have sufficient countervailing power so that no one can get the impression that they are God,” she says.
“Ensure gender diversity at the top: conversations change when teams are better mixed. And set the right tone and culture at the top. Culture is everything,” adds Pasha-Huizinga.
FCA implements rule expansion
The Financial Conduct Authority (FCA) current consultation on diversity and inclusion (CP23/20) focuses on non-financial misconduct and reflects a desire to capture and evaluate more in-depth information about an individual’s behavior.
For example, the FCA is proposing to extend the scope of their conduct rules to cover serious cases of bullying and harassment within a company.
The proposals from the consultation also suggest that the ‘fit and proper’ test will take into account serious misconduct, such as sexual or racially motivated offences, both inside and outside the workplace.
Peter Swabey, policy and research director at the Chartered Governance Institute UK and Ireland (CGI), says the Odey AM case is one of “unacceptable behavior on the part of an individual”.
“Senior leaders are not only accountable to the board, but must also set an example for other employees. When leadership goes wrong and behavior is out of order, it has a knock-on effect on people and attitudes across the organization,” Swabey adds.
Governance “functions as a framework for better decision-making,” according to the CGI.
“Whether these decisions are made on a collective or individual basis, they must be made in the best interests of the organization, and in an informed manner, without being influenced by personal interests,” says Swabey.
“One dominant personality can interfere with the decision-making framework that good governance aims to provide.”
The FCA has opened investigations into both Odey AM and its founder.