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Laven Partners comments on confusion over hedge fund administrator role

Thursday, January 17, 2013

Beverly Chandler, Opalesque London: Laven Partners chief executive officer, Jerome de Lavenere Lussan, has commented on the role of fund administrators in hedge funds, saying: "There is confusion in the hedge fund industry regarding the responsibilities of hedge fund administrators. Investors believe that administrators are responsible for providing valuation and accounting services to funds, in reality however the role of administrators is limited to the aggregation of data inputs when striking the NAV. In most cases the administrators are not questioning the pricing of underlying assets, leaving that responsibility to other counterparties, such as managers, brokers and auditors."

The firm draws attention to the fact that in the wake of a hedge fund fraud, the fingers would usually be pointed at the investment management company of a fund, which is ultimately responsible for the day-to-day operations of the investment vehicle. "Perhaps not as widespread, but certainly as interesting, is the case of hedge fund administrators being sued as part of their involvement in providing certain services (or lack thereof) to the industry, such as calculating the Net Asset Value ("NAV") of a fund" the firm writes.

"Recently, in the case of Weavering Capital (UK) Ltd ("Weavering"), the liquidator Grant Thornton has sued Dublin-based BNY Mellon Investments Servicing International, previously known as PNC Global Investment Servi......................

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