Hedge Fund Governance : Evaluating Oversight, Independence, and Conflicts.
- 1st ed.
- 1 online resource (387 pages)
Cover -- Title Page -- Copyright Page -- Dedication -- Contents -- Biography -- Preface -- Chapter 1 - Introduction to Hedge Fund Governance -- Introduction to the concept of governance -- Why should investors care about hedge fund governance? -- Governance: a vague concept? -- How should investors think about hedge fund governance? -- What hedge fund entities are investors looking at to promote good governance? -- Distinguishing between governance and due diligence -- Is governance controlled by the hedge fund board of directors? -- Governance outside of hedge funds -- The origins of hedge fund governance lie in corporate governance -- Historical perspectives on corporate governance -- Investor-driven governance -- Governance in the Prewar Period -- The Postwar Era of Governance From the 1960s -- Focus on Insider Trading in the United States -- Rise of the Class Action Lawsuit -- 1970s: The Decade of Governance -- Rise of Agency Theory -- 1980s Onward-The Growth of Modern Corporate Governance Reforms -- A Growth in Governance Failures and Frauds at Large Corporations -- Defining hedge fund governance -- A universal definition of governance? -- Is governance defined by perspective? -- Who is responsible for hedge fund governance? -- Is governance primarily an investment-related concept? -- Distinguishing between governance and hedge fund activists -- Hedge fund governance: a working definition -- References -- Chapter 2 - Hedge Fund Board of Directors: A Governance Proxy? -- Introduction to the hedge fund board of directors -- Are vitriolic director criticisms merited? Clarifying a modest proposal -- A Lack of Uniform Opinion About the Directorship Industry -- Institutional Investor Directorship Industry Objections -- Wholesale Director Dismissal-Throwing the Baby Out With the Bathwater? -- Understanding hedge fund board structures. Offshore versus onshore hedge funds -- Different types of hedge fund boards -- Clarifying director terminology -- A brief history of hedge fund directors -- The forgotten master fund board -- Legal Fiction or Effective Board? -- Unmasking the Master Board Members -- Ignoring the Master Board-Fool's Paradise or Blissful Ignorance? -- Why Investors Should Care About Master Boards -- Who are these board members? -- The expanding director talent pool-a blessing and a curse? -- Who decides who gets to be on the board? -- You're not who I hired!-the "associate director" bait and switch? -- Director compensation-a double standard? -- What do directors actually do? -- Director liability-a few words about indemnification -- Director delegation -- References -- Chapter 3 - Regulatory Governance of Hedge Funds -- Introduction to regulatory governance -- A few words on what this chapter doesn't cover -- Why so many jurisdictions? -- Why the increased focus on the importance of offshore regulations? -- Leading hedge fund regulators -- Perspectives on global hedge fund regulatory development -- How do regulations relate to governance? -- The Relationship Between Compliance and Regulatory Governance -- Regulation and Fund Boards -- Regulation's Influence on Other Aspects of Hedge Fund Governance -- Key fund regulations and their effects on governance -- Cayman Islands -- United States -- Are Hedge Fund Registration Requirements Good for Governance? -- Is Registration Even the Key Governance Issue? -- Is This All Moot? -- Europe -- Ireland -- Switzerland -- Asia -- Hong Kong -- Hedge fund regulatory governance in other jurisdictions -- British Virgin Islands -- China -- Singapore -- Background on Singapore Regulatory Environment -- Requirements for Independent Custody -- Requirements for Independent Valuation of Investor Assets. Requirement for FCMs to Undergo Independent Annual Audit by External Advisors -- Requirement to Have an Adequate Risk Management Framework Commensurate With the Type and Size of Investments Managed by the... -- Form Over Substance Governance? -- Conclusion -- References -- Chapter 4 - The Role of Fund Service Providers in Implementing Governance -- Introduction to hedge fund service provider governance -- Are some service providers more important to governance? -- Isn't casting a broader net better? -- Are "ancillary" service providers important in evaluating governance? -- Common hedge fund service providers -- Isn't service provider governance simply fund operations? -- The administrator's governance role -- Introduction to Administration Governance -- Is That All Administrators Do? -- Directors in Sheep's Clothing? Administrator Similarities to Directors -- Can't I Just Resign? The Lancer Example -- Custodian and prime broker governance -- Additional comments on fund directors and governance -- Director Resignations-You Can't Fire Me -- I Quit! -- Capacity Consideration in Evaluating Governance -- Introduction to Hedge Fund Director Capacity -- A Director Capacity Example -- Questioning Director Capacity Classifications -- Related Director Resource Allocation Capacity Considerations -- Compiling Director Capacity Figures -- Evaluating Director Capacity-How Many Directorships Are Too Many? -- Director Capacity Survey Data -- Final Comments on Director Capacity -- Gauging individual service provider quality and weight in external governance -- Conclusion -- References -- Chapter 5 - Hedge Fund Internal Governance Mechanisms -- Introduction to hedge fund governance mechanisms -- Why are hedge funds now talking about governance? -- Is the JOBS Act good for hedge fund governance? -- Does enhanced flexibility promote better governance?. Is technical compliance enough for good governance? -- I said governance, didn't I? -- Governance mechanism classification challenges -- Hedge fund internal governance by committee? -- Investment Committee -- Management Committee -- Valuation Committee -- Business Continuity and Disaster Recovery Committee -- Risk Committee -- Counterparty Committee -- Compliance Committee -- Best Execution Committee -- Steering and Legislative Committees -- Hedge fund capacity as a governance indicator -- Ambitious Capacity Limits Versus Reality -- Revisionist History-Are Manager Capacity Limit Changes Overly Discretionary to Promote Good Governance? -- Capacity Can Be an Umbrella Term -- Are "Closed" Funds Good for Governance? -- Third-party operational control audits as governance proxies? -- Conclusion -- References -- Chapter 6 - Developing a Framework for Investor Analysis of Hedge Fund Governance -- Introduction to developing governance analysis frameworks -- Do strong operations imply good governance? -- Is governance a moving target? -- Institutional investor governance: the CalPERS model -- If Separate Accounts Are So Good for Governance, Why Can't We All Have Them? -- Bad Blood Driving Good Governance? -- Classifying governance analysis into two camps: investment and operational -- Developing a governance program -- Understanding governance evaluation standards -- Beginning governance assessments -- Analyzing director governance -- Are You Underestimating the Benefits of Director Engagement? -- Analyzing Director Turnover -- Director Background Investigations -- Director On-Site Visits -- Additional Director Governance Analysis Considerations -- Governance analysis of service providers continued -- Hedge Fund and Administrator Interaction as a Governance Indicator -- Evaluating Prime Broker Governance. Analyzing Legal Counsel Governance-Does Service Provider Clustering Improperly Minimize Governance Weights? -- Reviewing Information Technology Consultant Governance -- Learning What Consultants Do -- Does the Hedge Fund Control Information Access? -- The Importance of Governance Assessments on Information Technology Consultants -- Governance analysis continued-audited financial statements examples -- Does the Source of Financial Statements Matter to Governance Analysis? -- Authenticity and Accuracy-Considering Audited Financial Statement Source Independence in Governance Assessments -- Can Administrators Serve as an Independent Statement Sources to Enhance Governance Oversight? -- Additional Comments on the Governance Implications of Financial Statement Source Considerations -- Governance Considerations Related to Interpreting Financial Statement-Related Party Transactions -- Analyzing Related Party Fees -- Considering Related Limited Partner Capital Balances -- Fee Waiver Considerations -- Interfund Transactions -- Additional Comments on the Governance Implications of Financial Statement Source Considerations -- Incorporating Fund Expense Disclosure Analysis Into Governance Reviews -- Governance Implications of Legitimate Versus Illegitimate Expenses -- Evaluating Gray Area Expenses -- Figuring Out the Expense Allocation Rules -- Additional Comments on Expense Analysis During Governance Due Diligence -- Governance analysis continued-business continuity examples -- Business Continuity Pandemic Planning-Example of a Governance Indicator? -- Pandemic Scares Do Happen: SARS and Swine Flu -- Pandemic Boilerplate -- Fear Mongering or Best Practice Governance? -- Additional Comments on BCP/DR Pandemic Planning and Governance -- Business Continuity Backup Planning-Another Governance Indication Example. Can Keeping the Lights On Be Representative of Good Governance?.