Treasury Secretary Henry Paulson on Tuesday announced two voluntary best practices recommendations for the hedge fund industry.
The reports are a follow up to guidelines released by the President’s Working Group in February 2007 to encourage greater transparency of hedge funds. Two advisory panels released two separate reports on hedge funds — one on recommendations for hedge fund investors and one for hedge fund asset managers.
“The recommendations complement each other by encouraging both types of market participants to hold the other more accountable,” Mr. Paulson said.
The report for asset managers, which was headed by Eric Mindich, CEO of Eton Park Capital Management, recommended hedge funds to strengthen their business practices, including disclosures, valuation, and risk management; disclosing hard to value assets, investor disclosure based on public company mode, and minimizing conflicts of interest. The report for hedge fund investors, which was chaired by Russell Read, CIO of the California Public Employees Retirement System, recommended that hedge fund fiduciaries establish due diligence processes, comprehensive investor risk management best practices, and increased accountability for hedge fund investors and managers.
The recommendations will be open for public comment for 60 days.
