Ronan Guilfoyle, author of this article, is a Managing Director at Caymans and Ireland-based management firm dms Management Ltd. and acts as an independent director on hedge funds. This article was published in Cayman Financial Review this month.
Reflecting on the recent global financial crisis one can’t help but wonder what lessons have been learned from the experiences of many of the world’s hedge fund participants. Are we now better off for having suffered all the difficulties that many hedge fund stakeholders faced, or will history repeat itself as it has done many times before? Is increased operational due diligence the panacea for all the ills the hedge fund industry endured recently?
One thing is clear, the stakes are rising for independent directors and investors are realizing that effective fund governance is an important part of the solution.
Investors are beginning to realize that more detailed due diligence is now a prerequisite for responsible investing. It is imperative that investors evaluate the operational risks at each stage of the investing process, and while many may never fully understand the entire methodology that any investment manager may employ, it is possible to understand how the auditor, independent administrator and the independent director all interact to deliver effective governance while maintaining their independence.
Investors now recognize that, for an independent director to effectively respond in a tim......................
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