Alert April 15, 2008

Committees of the President’s Working Group on Financial Markets Release Best Practices for Hedge Fund Asset Managers and Hedge Fund Investors

The Asset Managers’ Committee and the Investors’ Committee established by the President’s Working Group on Financial Markets (the “PWG”) have released complementary sets of best practices for hedge fund asset managers and hedge fund investors, respectively, that are based on the PWG’s February 2007 “Principles and Guidelines Regarding Private Pools of Capital.”  The best practices for asset managers address areas such as disclosure, valuation of assets, risk management, business operations, compliance and conflicts of interest.  The best practices for investors consist of a Fiduciary’s Guide and an Investor’s Guide. The Fiduciary’s Guide provides practice standards for fiduciaries considering investments in, or that have already invested in, hedge funds on behalf of qualified institutions and individuals. The Investor’s Guide is designed to assist those who execute and administer hedge fund investment programs once the decision to invest has been made.  Both best practices documents were designed to be consistent with efforts in the United Kingdom to improve hedge fund practices (see coverage of the Hedge Fund Working Group’s Best Practice Standards in the January 29, 2008 Alert).