By Nell Mackenzie, Sinead Cruise and Naomi Rovnick
LONDON (Reuters) - Big banks and investors quickly sought to distance themselves from Odey Asset Management after allegations of sexual misconduct by its founder, yet for some in the City of London signs of a deeper change in culture are still scant.
The Financial Times and Tortoise Media reported on Thursday that 13 women alleged founder Crispin Odey, one of Britain's best-known hedge fund managers, had sexually assaulted or harassed them over a 25-year period.
Odey told Reuters on Thursday that the report was a rehash of an old article and none of the allegations have been stood up in a courtroom or an investigation. Odey was acquitted of indecent assault charges by a British court in 2021.
Odey Asset Management "does not recognise the picture of the firm that has been painted" by the allegations, it told investors in a letter seen by Reuters.
Within hours of the report being published, Wall Street firms including Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) began reviewing their prime broking ties with Odey Asset Management, sources familiar with the matter told Reuters.
"We are confident our service providers will continue to work with us," an Odey Asset Management letter said later.
By Friday, Canada Life, an asset manager overseeing around 40 billion pounds ($50 billion) of client funds in Britain, said it had suspended its relationship with Odey Wealth, a private client-focused part of Odey Group, with immediate effect. A Canada Life spokesman confirmed the allegations reported by the FT and Tortoise were the reason for this decision.
British asset manager Schroders (LON:SDR), which oversees more than 700 billion pounds, said it had exited "residual" holdings in Odey funds "following the FT's report of sexual misconduct allegations against Crispin Odey."
Odey denies all wrongdoing and has no known criminal conviction. Yet the rapid reaction shows that even a report of misconduct will face consequences in the wake of the #MeToo movement that has swept through the corporate, political and entertainment worlds since 2017.
Industry experts consulted by Reuters said that did not necessarily indicate a major change in culture in the City, however.
"The immediate distancing of major banks from Crispin Odey illustrates that companies are eager to avoid becoming the latest targets of cancel culture campaigns," said Evan Nierman, CEO of New York-based crisis PR firm Red Banyan.
But, he added: "At present time, this appears to be a problem for Odey, as opposed to some sort of watershed #MeToo moment set to engulf the broader British financial services industry."
In finance, an industry in which women are under-represented in senior roles, there is a growing emphasis on improving environmental, social and governance standards.
"Ultimately, pressure from institutional investors may be the only path to really making change on these issues that have such tremendous emotional and professional consequences for women and other people," said Megan Tobias Neely, a former hedge fund analyst.
Neely, who retrained and returned to finance as a sociologist and wrote a book, "Hedged Out: Inequality and Insecurity on Wall Street," said her research on hedge funds had found a repetitive pattern of retribution for women who reported sexual harassment and discrimination.
She said many women she interviewed said they were pushed out of firms and in some cases, blackballed from the entire industry.
Bullying, harassment and aggression account for the majority of claims investigated by UK regulator The Financial Conduct Authority, according to a recent report from Financial News, which cited a freedom of information request.
A #MeToo shift for London's hedge fund scene would hinge on the actions of institutional players, like banks cutting their prime brokerage ties and investors halting fund flows, said Daniel Beunza, a professor of social studies of finance at Bayes Business School.
Politicians also play a role. Britain's opposition Labour Party plans to return 100,000 pounds in donations from Algebris founder and CEO Davide Serra following a harassment claim, a party official said on Friday.
A London employment tribunal last month awarded a former Algebris employee over 32,000 pounds in a sex harassment claim against the asset management company.
Serra did not immediately return phone calls, messages and email requests for comment. Algebris declined to comment.
At the heart of the discussion of diversity and culture in financial services, is that "(nearly) everything is tolerated as long as there is upside for the bottom line now," said Yasmine Chinwala, partner at New Financial.
"For all the momentum, that fundamentally hasn't changed," she said.
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