Hedge funds agree on voluntary standard

London’s biggest hedge funds have decided on a voluntary standards which will
disclose more information about the risks they run, the fees they charge and how
they value their assets, in an effort to head off greater regulation.

The Hedge Fund Working Group has received praise from investors and
regulators for its voluntary guidelines to fund managers, the most ambitious
attempt yet to codify best practice for the industry, The Financial

A group called the Hedge Fund Standards Board will oversee the standards.
Managers who sign up must comply or explain why they cannot meet them. The
US Treasury has put
together committees of leading investors and hedge funds to develop its own best
practice guidelines, about to be released shortly.

‘Whilst it might work, it only takes one bad apple to spoil the whole thing,’
Tom Brown, KPMG head of hedge
fund advisory in Europe, said. ‘If someone self-certifies to say that they have
been complying and it turns out they haven’t and it all goes pear-shaped, it
will damage the whole reputation of the standards.’

Further reading:

FSA plans formal probe of HFMs

FSA mulls derivative disclosure

story in The Financial Times

Related reading

Fiona Westwood of Smith and Williamson.