Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
HedgeCo.Net – The "post-Madoff era" and the litigious society in which firms operate today have presented many operational risks that are beyond control. Managers are not getting paid to take those risks and the consequences can be devastating.
Regulatory investigations and private litigations are on the rise and may result in expensive legal defense and the allocation of resources away from your business.
The new administration supports increased transparency and the regulation of hedge funds. In addition, there is an immense amount of international pressure in favor of regulation. This has made it very politically attractive to support the legislation of industry regulation, which may potentially threaten your business.
But there are options.
At CBS Coverage, the Financial Institutions Risk Group is focused solely on protecting your fund, its investors, and yourself.
CBS provides an excellent added value to your hedge fund and can help increase your investor confidence and trust.
Street.Com – Financial authorities on the Cayman Islands are promising a legislative crackdown to bolster investor confidence in the post-Madoff era. But while the Caymans — long a hedge fund haven due to tax advantages and light regulation — may push for tighter oversight, experts predict they will not lose their status as hedge funds’ offshore crown jewel.
The Caymans have been touted in recent years as the "centre of choice" for hedge funds by Walkers, a major offshore law firm, as well as other service providers for several investor-friendly reasons.
West Palm Beach (HedgeCo.net) – The recent wave of scandal related to hedge funds and funds of funds has made investors think twice about investing in self-administrated funds, see ‘Andrew Schneider on Nadel Funds’.
Dermot Butler, Chairman of alternative fund administrator, Custom House Group, said, “In today’s new investment environment, more than ever hedge funds and funds-of-funds must have independent outside administrators as a foundation to help rebuild investor confidence and attract new investment capital.”
Fund administrators, such as the $35 billion Custom House Group, provide a range of services to funds and fund-of-funds including (but not limited to), fund accounting, portfolio valuation, NAV calculation and shareholder services as well as anti-money laundering services and reconciliation services and record-keeping functions.
“In anything less than an independent fund administration relationship, there is at the very least a perception that a conflict of interest may exist that could prevent objective verification of a fund’s investment activities and even the existence of underlying assets in a given fund, let alone an objective and accurate valuation of the fund’s assets,” Butler said. “This perceived conflict may occur when an outside administrator is affiliated with a financial institution, with an investment manager, or when the administrator is associated with a hedge fund itself.”
“As stand-alone companies, independent administrators have no affiliations to any outside financial entities, et ergo, no such conflicts exist,” he concluded.
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Wealth Bulletin- In January, 14 of the UK’s largest hedge funds, including Man Group, Brevan Howard and Gartmore, backed the Hedge Fund Working Group’s best-practice standards.
These aim to improve governance and disclosure and to promote transparent and independent valuation.
Six months on, however, only one, unnamed, hedge fund beyond the 14 working group members, has signed up to the code.
Sir Andrew Large, chairman of the working group, believes it is unrealistic to expect hedge funds to sign up immediately.
