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An independent, active board is the ideal business model for hedge funds

Thursday, August 15, 2013

Komfie Manalo, Opalesque Asia for New Managers:

An independent and active board that demands full transparency, is an ideal business model for hedge funds to achieve balanced corporate governance, said Eli Combs, the Founder and President of Connecticut-based hedge fund,Meehan Combs. Combs made the statement during the latest Opalesque Connecticut Roundtable.

"We have a truly independent and active board which is unique, we think, among hedge funds," he said, adding, "they are locally based, and they have the right to see full transparency into the portfolio. They also have the right to fire us as a manager of the fund, which you don’t see in any hedge fund, but which should be an aspect of every hedge fund. You see it in mutual funds, it is common in the mutual fund world, but it is very uncommon in the hedge fund world."

Combs added that their board of trustees can fire managers at any sign of bad behavior. In that instance, the board could opt to turn management of the portfolio over to BlackRock, which serves as the firm’s cornerstone investor.

He cited the case of beleaguered hedge fund SAC Capital, noting investors would not have suffered the same fate if and independent board structure was in place. "Their board would have shut them down, taken their equity portfolio, given it to someone like Goldman Sac......................

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