Odey: the fine not the breach

I read the Crispin Odey Notice of Decision published by the FCA on 17 March 2025.  Whilst the overall actions of Mr Odey are incredulous and many will be commenting on that part of it, particularly the lack of integrity, I thought that the determination of the fine was interesting so have summarised the process here.  We should note that the FCA’s decision has been referred to the Upper Tribunal, so this may not be the final outcome for Mr Odey. 

The FCA’s policy for determining inter alia financial penalties on firms and individuals is set out in the DEPP (Decision Procedure and Penalties Manual) section of the Handbook.  The FCA use a five-step framework to determine a fine on individuals involved in non-market abuse cases. 

Just to summarise the issue, the FCA Notice sets out the following: 

Mr Odey’s conduct summarised [below] demonstrates a clear lack of integrity because Mr Odey’s actions: 

(1) were deliberately designed to frustrate OAM’s ongoing disciplinary process into his conduct, in order to protect his own interests; and 

(2) showed a reckless disregard for OAM’s governance and caused OAM to breach certain regulatory requirements. 

Furthermore, Mr Odey’s conduct was such that he does not meet the Fit and Proper test contained in the Authority’s Handbook due to his lack of integrity. 

In Mr Odey’s case, the Notice of Decision sets out the rationale and calculations for each of the five steps as follows: 

Step 1: Disgorgement 

Did the individual derive any financial benefit from the breach?  No 

Step 1 is £0. 

Step 2: Seriousness of the Breach 

This is based on a percentage of the individuals relevant income.  This starts with the gross amount of all benefits received over the period of the breach.  The FCA determined here that the period was from 24/12/2021 to 17/11/22.  As this was less than 12 months, the relevant income is that earned in the 12 months preceding the end of the breach.  The FCA determined that this amount was £2,548,957.   

They then apply a percentage based on the seriousness between 0% and 40%, set at level 1-5, starting at level 1 at 0%, increasing in 10% intervals up to level 5 at 40%.  The impact was a failing in the Firm’s governance and control structure for a period of 112 days, which was a risk of loss caused to investors.  The nature of the breach looks at several considerations: seniority, steps taken to remedy breaches and whether actions were deliberate. 

The FCA determined that this was level 4 (30%) based on impact and nature of the breach. 

Step 2 is therefore £2,548,957 x 30% = £764,687. 

Step 3: Mitigating and Aggravating Factors 

Here the FCA may increase the level above after taking into account factors which aggravate or mitigate the breach.  This is where it starts to get interesting.  The FCA communicated their concerns after Mr Odey replaced his entire ExCo with himself and cancelled his own disciplinary hearing.  Only for him to repeat the same exercise again following another allegation.  The FCA increased the penalty by 20%. 

Step 3 is therefore £764,687 x 120% = £917,624. 

Step 4: Adjustment for Deterrence 

Here the FCA consider if the figure arrived at Step 3 would be enough to deter Mr Odey or others from committing the same or similar breaches.  In this case, the FCA considered the figure to be too small in relation to the breach, also considering the AUM of the Firm at the time (£2.9bn).  They increased the figure by a multiple of 2. 

Step 4 is therefore £917,624 x 200% = £1,835,248. 

Step 5: Settlement Discount 

Step 5 allows the FCA to reduce the amount at Step 4 by a discount (excluding any disgorgement) if they agree with the individual a settlement.  As Mr Odey and the FCA did not reach agreement, no discount was applied. 

Step 5 is therefore £1,835,200 (rounded down to nearest £100). 

The FCA decided to impose a financial penalty of £1,835,200 on Mr Odey for breaching Individual Condict Rule 1 (You must act with integrity).  In addition, as this was considered a serious breach, the FCA determined that he should be prohibited from performing any function related to regulated activities. 

We assume that Mr Odey’s advisers have considered that there are grounds for appeal here and it’s not clear whether this is a technical interpretation of the law surrounding the breach or the calculation of the fine, but we look forward to reading the appeal notice when published.