Hedge Fund Standards Get Cold Shoulder From Funds, Investors

Nov 17 2008 | 9:04am ET

Just one in 10 British hedge funds will definitely adopt best-practices standards promulgated last year by a group of top firms, a new study shows. The revelation is not likely to make regulators happy, as fingers of blame for the financial crisis continue to point at hedge funds.

A survey of 100 hedge funds by Kinetic Partners shows that two-thirds of hedge funds in the U.K. say they aren’t sure they will adopt the self-regulatory regime of the Hedge Fund Standards Board. Fully one-fifth of hedge funds say they will definitely not adopt the standards.

More worrying still, there seems to be very little demand on the part of hedge fund clients for the greater compliance with the voluntary code, which calls for, among other things, tougher standards for asset valuation, third-party valuation and a Chinese Wall between valuation and portfolio management. Not a single fund interviewed by Kinetics said that they had been asked by investors to adopt the code, despite the difficulties faced by hedge funds in recent months.

“It is alarming that no hedge funds had been contacted by their investors regarding the standards,” Julian Korek of Kinetics said.

The HSFB code also codifies best practices on disclosure, governance, risk and shareholder conduct.

Approximately 30 firms, including the original 10 that crafted the standards, have adopted the HFSB code. Anotion Borges, who heads the Hedge Fund Standards Board, the self-regulatory group set up by the HFSB, said he expects at least 100 more to adopt the standards soon.

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…