New Hedge Group To Consider Voluntary Standards

Jun 20 2007 | 3:44pm ET

Hedge funds may become a little less secretive in an effort to head off regulatory action, as a baker’s dozen of funds have joined forces to consider voluntary standards.

The group includes 11 London-based funds—Man Group, Brevan Howard, Centaurus Capital, GLG Capital Partners and Gartmore among them—as well as one each from the U.S. and Sweden. and is headed by Andrew Large, a former Bank of England deputy governor and ex-chief of Financial Services Authority predecessor the Securities and Investment Board. Large said the group, which is supported by the Alternative Investment Management Association upwards of 20 funds in addition to those sponsoring it, will consult hedge funds, prime brokers, administrators and investors as it considers encouraging greater voluntary disclosure. Its report is expected in about six months.

The group will look into increasing available information regarding performance, fees and risks, but will not become a self-regulatory body, it said. It will also look into shareholder activism—a bête noir of many a European power broker—though it does not expect to make any recommendations in the area.

The move brought a smile to the face of the German government, which has for months unsuccessfully pushed for a voluntary code of conduct, most recently failing to convince its G8 partners to support such an initiative at the group’s summit this month. The country’s point man on the issue, Finance Minister Peer Steinbrück, immediately moved to take credit, saying, “Without the process started by us, we would possibly have not had such a step at this time.”

Not everyone is happy, especially if the hedge fund group succeeds in avoiding government intervention. Britain’s GMB labor union, a vocal opponent of hedge funds and private equity firms, called a voluntary standard “window dressing of little value.”

“It is inevitable that government will have to look at the long-term impact that hedge funds have on the economy,” he told the Financial Times. “Maybe it is time to get the clippers out to prune the hedge funds.”


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