SCOTSTONE COLUMN: He who pays the piper calls the tune
He who pays the piper calls the tune: Investor due diligence has tightened hedge fund operational controls Ian Hamilton
This column is authored by Ian Hamilton, who is the founder of IDS Group. IDS provides fund administration services in Africa and Europe through Malta. He is also the founder of Scotstone Investments, a company that has fund structures and services for global emerging new managers.
It is not an easy ride for many hedge funds with the new institutional investors now calling the tune.
Investors in the past have unfortunately been sloppy in their due diligence when investing in hedge funds. One has only to see what Madoff was able to get away with and also to look at the institutional names involved in feeder funds into Madoff's fund.
Private investors do not have the resources to do a full due diligence test but there are short check lists that at least reduce much of the work needed. I call my list "Terms of Engagement" and it is the following:
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