Hedge Fund Governance: Evaluating Oversight, Independence, and Conflicts

Publications

Hedge Fund Governance: Evaluating Oversight, Independence, and Conflicts

Jason Scharfman, Managing Partner,
Corgentum Consulting, LLC

This book proposes that investors should expand the definition of hedge fund governance beyond traditional notions limited solely to the Board of Directors of offshore funds. Instead, included in this expanded governance analysis approach should be a host of other governance considerations ranging from internal hedge fund committees to the oversight of hedge fund service providers. Hedge Fund Governance summarizes the fundamental elements of hedge fund governance and principal perspectives on governance arguments. An authoritative reference on governance, it describes the tools needed for developing a flexible, comprehensive hedge fund governance analysis framework.

Case studies and interviews with professional fund directors shine a bright light of pragmatism on this framework. The author's global analysis of more than 5,000 hedge fund governance structures enables him to draw realistic conclusions about best practices. He also explores the value consequences of good vs. bad governance, estimating the actual dollar losses that can result from bad governance, as well as the operational and investment performance benefits of certain governance practices. Presents methods for evaluating qualifications, conflicts of interests, fees, obligations and liabilities of hedge fund Boards of Directors. Explains techniques for developing a hedge fund governance assessment program, including analyzing legal documentation analysis and financial statements for governance related information. Uses case studies and example scenarios in hedge fund governance successes and failures to explore investor governance rights and fund manager responsibilities in onshore and offshore jurisdictions.

Overview

  • Features exclusive interviews with hedge fund directors, leading legal and operational due diligence practicioners and financial regulators including the Cayman Islands Monetary Authority
  • Provides tools for investors to create an effective hedge fund governance assessment program
  • Analzyes hedge fund governance best practices and case studies in hedge fund governance failures
  • Release date: November 4, 2014

Topics Covered Include:

  • Governance considerations in analyzing hedge fund valuation approaches
  • Analyzing the role of hedge fund service providers such as administrators, prime brokers and auditors in the governance process
  • An overview of the impact of financial regulations such as Dodd-Frank and AiFMD on hedge fund governance
  • Governance best practices during hedge fund liquidations
  • Considerations for internal governance mechanisms including operational policy management, committee structures and advisory boards
  • Techniques for evaluating a hedge fund's Boards of Directors including conducting an analysis of :
    • common directors rights and responsibilities
    • director typical duties and level of engagement of directors
    • director's delegation of duties to hedge funds and other service providers
    • the management director's conflicts of interests
    • the role of associate directors
    • interaction between directors and other fund service providers
    • board compensation issues
    • director liability, insurance and indemnification issues

Click here to purchase a copy of the book on Amazon.com

Book Media

If a Hedge Fund is Profitable, Why Should Investors Care About It's Governance?
Amazon.com's Money & Markets Blog

The Journal of Wealth Management Book Review

Hedge Fund Governance Book Flyer

Book Press Announcement

Also available by Jason Scharfman:

Hedge Fund Operational Due Diligence: Understanding the Risks

Private Equity Operational Due Diligence, + Website: Tools to Evaluate Liquidity, Valuation, and Documentation