Hedge Fund Standards Board Proposes Changes On Disclosure To Investors

Mar 26 2015 | 11:03am ET

The Hedge Fund Standards Board is proposing changes to its Standards to improve disclosure of conflicts of interest to investors. The proposed changes also seek to strengthen internal compliance procedures to mitigate conflicts of interest.

One of the important changes being proposed will require managers to disclose parallel funds, including employee funds, and to disclose the aggregate size of employee and partner co-investment in those funds. The proposed changes will be subject to consultation with the industry and regulators.

Dame Amelia Fawcett, Chairman of the HFSB, stated: “The Hedge Fund Standards already address many different types of conflicts of interest in areas such as valuation, risk management and handling of redemptions. These new Standards and guidance are intended to enable better due diligence of conflicts of interest by investors.”

David George, Head of Debt & Alternatives of Future Fund Australia, said: “This consultation demonstrates the HFSB’s ongoing efforts to address important investor concerns, particularly in the area of conflicts of interest. The proposed changes will help investors assess the alignment of their managers with the investors’ interests.”

The proposed changes to the Standards are outlined in the Consultation Paper published today. The consultation will run until 12 June 2015.
In line with the HFSB’s mandate to update the Standards from time to time, this is the fourth time the HFSB is consulting on amending its Standards since their first publication in 2008.

The HFSB was set up in 2008 as the standard-setting body for the hedge fund industry and now has a growing membership internationally in both Asia and North America. Hedge fund managers in the US and Canada now account for 40 percent of the HFSB’s 123 signatories. Assets under management of all HFSB signatories total more than $700 billion.

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