Alert August 19, 2008

IOSCO Issues Final Report on Funds of Hedge Funds

IOSCO issued a final report on funds of hedge funds that issue shares to retail investors.  The report (i) provides an overview of current and proposed regulation of funds of hedge funds in various jurisdictions; (ii) identifies issues of concern to regulators; and (iii) proposes the development of guidelines for managers of funds of hedge funds to use in addressing liquidity risk and in carrying out due diligence both before and after investment.  The final report also reflects responses to IOSCO’s April 2007 report seeking comment on issues related to funds of hedge funds and views expressed by fund of hedge fund industry participants at a series of 2007 hearings held by IOSCO in Washington, DC, Paris and Hong Kong.