When governance fails: lessons from the Crispin Odey case for financial services firms

The recent conclusion of the regulatory proceedings involving Crispin Odey is one of the most significant cases of recent years at the intersection of financial services regulation, governance, workplace culture and employment law. While much of the public attention has focused on the allegations of inappropriate workplace behaviour, the regulatory action ultimately centred on a different issue: the obstruction of internal governance and disciplinary processes.

For financial services firms, the case provides a powerful reminder that culture and accountability are regulatory priorities with potentially career-ending consequences for individuals and significant implications for firms.

Summary of events

Between 2020 and 2021, Odey Asset Management LLP (OAM) conducted an internal investigation into allegations concerning Odey’s sexual harassment of female employees taking place over a number of years. Following that investigation, OAM’s executive committee (ExCo) concluded that Odey had behaved inappropriately and issued him with a final written warning on 4 February 2021.

A disciplinary hearing was subsequently scheduled to determine whether Odey had breached that warning. Before the hearing could proceed, Odey used his position as majority owner of the firm to remove members of the ExCo and appoint himself as its sole member. He later postponed the disciplinary process indefinitely. After appointing new committee members and subsequently removing them again, the disciplinary process was delayed by almost a year before eventually taking place in November 2022.

The FCA’s case was not focused on determining whether the underlying allegations of misconduct and harassment were true. Rather, the regulator alleged that Mr Odey had deliberately interfered with and frustrated the firm’s disciplinary process, disregarded governance arrangements and demonstrated a lack of integrity.

In March 2025, the FCA issued a decision notice proposing a financial penalty of approximately £1.8 million and a prohibition order preventing Mr Odey from performing regulated functions. The matter was referred to the Upper Tribunal. This month, the Tribunal upheld the FCA’s findings on all substantive allegations and confirmed the industry ban, while reducing the financial penalty to approximately £1.53 million.

The regulatory significance

Integrity means more than honesty

From a regulatory perspective, perhaps the most important aspect of the case is the FCA’s interpretation of integrity.

Historically, many individuals have associated a lack of integrity with dishonesty, fraud or misleading statements. The Odey case reinforces a broader principle that has emerged through FCA enforcement activity and case law: conduct can lack integrity even where there is no traditional dishonesty. Deliberately undermining governance processes, frustrating accountability mechanisms and placing personal interests above regulatory obligations may all amount to a breach of Conduct Rule 1.

The Tribunal’s endorsement of the FCA’s position provides additional support for this wider interpretation of integrity and fitness and propriety.

Governance must be robust

The case also demonstrates the risks that can arise in founder-led businesses or firms with dominant shareholders.

The FCA was particularly critical of actions that enabled a key individual to interfere with disciplinary procedures that were designed to hold them accountable. Where governance structures can be overridden by influential individuals, firms may face questions about whether those arrangements are genuinely effective.

Boards, governing bodies and compliance functions should consider whether current governance arrangements contain sufficient safeguards to maintain independence when investigations involve senior executives, founders or major shareholders.

The employment law perspective

Misconduct allegations must be handled properly

The case highlights the importance of establishing credible and independent processes for investigating complaints involving senior personnel.

One of the clearest lessons from the matter is that workplace investigations cannot simply exist on paper. Employees must have confidence that concerns can be raised and investigated without interference, regardless of the seniority of the person involved.

Many firms have invested heavily in whistleblowing arrangements, grievance procedures and speak-up frameworks. However, these mechanisms are only effective if there is genuine independence in decision-making and if disciplinary outcomes cannot be influenced by those who are the subject of complaints.

Culture matters

The case also forms part of a broader regulatory trend towards scrutiny of non-financial misconduct. The importance of this is, since 1 September, cemented now the FCA’s guidance  on non-financial misconduct and how this extends to the Conduct Rules is in place.

The FCA has repeatedly emphasised that behaviour relating to bullying, harassment, discrimination and other forms of workplace misconduct may be relevant to fitness and propriety assessments. The Odey proceedings are likely to reinforce the regulator’s view that culture and conduct risks should be treated as seriously as financial misconduct risks.

Increasingly, firms should expect regulators to consider not only how misconduct allegations are investigated, but whether corporate culture enables those concerns to be raised and addressed effectively.

What this means for the industry

The co-head of enforcement at the FCA, Therese Chambers, pointed to the possibility of there being other ‘horrific’ incidents as yet unknown in the City and that firms with a ‘slapdash’ approach to reporting and managing such occurrences are likely to fall foul of the new non-financial misconduct rules. She said if the FCA is made aware of serious incidents. it will act.

The implications extend well beyond asset management.

Financial services firms across all sectors should view the case as a warning that:

• regulators are prepared to pursue enforcement action based on governance failings alone (and in fact typically FCA concerns seem to have a governance link);
• obstruction or frustration of disciplinary processes may itself constitute misconduct;
• non-financial misconduct continues to move up the FCA’s supervisory agenda;
• firms need robust governance arrangements capable of operating effectively even when allegations concern key individuals. Seniority of an individual should not render arrangements ineffective.

The decision is likely to become a leading authority on the relationship between governance, culture and integrity in the UK financial services sector.

Questions firms should be asking themselves

In light of the case, firms should consider:

• could a founder, shareholder or senior executive influence an investigation into their own conduct?
• are disciplinary procedures genuinely independent?
• do whistleblowing arrangements provide sufficient protection and escalation mechanisms?
• have governance arrangements been stress-tested for allegations involving senior management?
• are fitness and propriety assessments appropriately considering conduct and cultural factors?
• are HR, legal, compliance and risk functions aligned in their approach to non-financial misconduct?

The Odey case should not be viewed merely as an enforcement action against an individual. It is a reminder that governance frameworks are only effective if they continue to function when they are most needed.

Financial services firms should take the opportunity to review governance structures and board effectiveness, disciplinary procedures, whistleblowing arrangements and fitness and propriety frameworks to ensure they can withstand challenge from even the most senior individuals within the organisation.

For boards, senior managers and compliance leaders, the key question is not whether a similar situation could arise within their firm. It is whether their governance framework would be strong enough to withstand it.