Odd Asset Management suspends major hedge fund

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O’Day Asset Management has suspended two of its hedge funds after investors demanded they pull money following the disclosure of sexual misconduct allegations against founder Crispin O’Day.

According to two people close to the firm, ODE European Inc., the firm’s lead fund, and OEI MAC have large amounts of redemption requests, which led ODE Asset Management to suspend them.

In a letter to clients last week, the fund’s board said it was “monitoring the level of redemptions received”, it said. Oday Asset Management declined to comment.

The suspension comes after Crispin O’Day was removed from the fund’s management earlier this month in the wake of allegations reported by the Financial Times. O’Day has vehemently denied the allegations.

The group’s banking partners, including Goldman Sachs, JP Morgan and Morgan Stanley, have cut ties with the firm. These prime brokers offer hedge funds to enhance returns and derivatives to protect against losses.

Oday Asset Management has also been forced to suspend several other funds as clients rushed for the exits.

Over the past few weeks, the company has suspended trading in Special Situations, Brook Developed Markets, LF O’Day Portfolio and Brook Absolute Return. The Ode Swan Fund, which has ceased trading, is being closed.

The purpose of the fund suspension is to provide time for managers to sell assets in an orderly manner to meet redemption requests so that investors do not face huge losses from fire sales.

The latest emergency measures come as the firm said it was in “advanced discussions” to transfer some funds and staff to rival groups, although it did not name the other parties. ODE Asset Management, founded by ODE in 1991, manages approximately $4.4 billion.

In an effort to meet the high volume of withdrawal requests, the company has been selling stakes in several stocks including currency printer De La Rue over the past few weeks.

The filing shows the asset manager sold 6 percent of auto dealership Pendragon this month, reducing its stake to 4 percent, as well as the restaurant group’s 2 percent stake. Oday Asset Management reduced its stake in small-cap stock Advanced Oncotherapy.

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

The UK’s Financial Conduct Authority last week announced restrictions on both ODE Wealth Management and ODE Asset Management, including requiring them to submit details of their bank accounts to the regulator each week and seek regulatory approval for “extraordinary” payments above £20,000. Compulsion is included.