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From Kirsten Bischoff, Opalesque New York: “At a time when the activities of hedge funds are under such intense scrutiny, it is more important than ever that the industry demonstrates it is living up to its responsibilities by adhering to best practice standards,” comments Antonio Borges, chairman of the Hedge Fund Standards Board (HFSB), in a recently released statement. In the United Kingdom hedge funds have been asked to demonstrate their adherence to these standards by signing a compliance document.

However, the United States, which will soon see the release of the President’s Working Group final report on hedge fund best practices, will not require such a sign off on the part of hedge funds. “In the US the best practices standards are really being driven by the investor side,” says Judith Gross, Principal of JG Advisory Services a New York based compliance and consulting firm. The report is being recommended in two pieces, one part for the investor and one part for the managers.

Recommendations to investors include, among other things, maintaining a good risk allocation profile, assessing valuation methods, and over-all, essentially just not investing in funds which don’t meet the best practices.” The United States regulators have thus far decided not to mandate US hedge funds to sign off on the PWG regulations, because the belief is that investors will demand that hedge fund managers meet these baseline requ......................

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