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Bailey McCann, Opalesque New York: A new whitepaper from Sound Fund Advisors looks at current practices on hedge fund governance through an examination of calendar-year 2012 data from the SEC on over 2000 hedge funds. The paper includes a number of notable findings, such as 26% of funds have no external directors, and 14% have the highest risk profile -- no external directors and only one or two internal directors. US hedge funds also continue to lag their European counterparts in terms of overall governance practices.

The report notes that 2012 data did show some improvement over what was submitted in 2011, however, that still sets a low bar. Larger funds are avoiding some of the more troublesome board configurations, but they still lag behind international funds. Only 35% of US funds have split boards, which the report says are more independent, versus 72% in the UK and EU.

Jumbo directors, or directors who serve on hundreds of boards still continues to be a big trend in the US, despite negative press, and investor reports. 2012 data shows the top 30 jumbo directors likely sit on more than 100 each, and the top 3 likely sit on more than 400 each. This is especially true for Cayman funds which have a 60% probability of including one of these jumbo directors.

Cayman funds are also out of alignment with investors in terms of the background most directors have. Th......................

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