FCA sets scale of investigation into Crispin O’Day

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The Financial Conduct Authority has publicly confirmed its investigation into Crispin O’Day and O’Day Asset Management for the first time and defended its “thorough” supervision of the hedge fund group.

In a letter to the Treasury select committee published on Wednesday, FCA chief executive Nikhil Rathi said that although there is a limit to how much he can say, “In the extraordinary circumstances of this matter, it is necessary and appropriate for me to confirm this.” ” The Committee noted that the FCA continued to investigate both Mr Crispin O’Day and O’Day Asset Management LLP.

O’Day’s investigation “focuses on allegations that he superseded the executive committee of OAM with improper purpose”, wrote Rathi, and whether he is a “fit and proper person” to work in financial services.

The regulator is also looking into whether it has “failed to comply” with conduct rules on honesty, reasonable skill, care and diligence. O’Day fired the hedge fund’s executive committee in 2021.

The Financial Times revealed last month that 13 women had alleged that O’Day had sexually harassed or assaulted them over two decades. He vehemently denies the allegations.

Rathi said FCA was in contact with the police regarding the “potentially criminal” nature of the allegations.

FCA for failing to conduct its affairs with reasonable skill, care and diligence and for failing to take reasonable care in organizing and controlling its affairs responsibly and effectively with substantial risk O’Day Asset Management is being investigated for “potential violations of the principles of Management System and Control”. Oday Asset Management did not immediately respond to a request for comment.

Rathi said the investigation was opened in mid-2021 and the FCA’s monitoring of Oday Asset Management was “intense” from 2020.

He also confirmed that O’Day had threatened judicial review over the investigation, as first reported by the FT. “We responded strongly to it. In this incident, court proceedings have not started and we are continuing with the investigation,” he said.

Following the allegations, O’Day was ousted as a partner of the hedge fund that managed $4.4 billion and the group is now effectively being liquidated as some of its fund and portfolio managers moved to other firms. Are.

Morgan Stanley and JPMorgan Chase are among the major banks that have cut ties with Oday, stripping the hedge fund of essential credit risk management tools for trading.