Cayman Islands dives into deeper water – Financial News – February 2013
The evolution of hedge fund investors from mainly funds of funds and high-net-worth individuals to predominantly institutional investors, acting in a fiduciary responsibility to their clients, has resulted in a greater focus on corporate governance.
One area under close scrutiny is fund directorships. Investors are asking if a limit on directorships per person should be imposed.
The Cayman Islands Monetary Authority, known as CIMA, last month outlined its proposals to create its first public database of funds domiciled on the islands and their directors. The regulator, which looks after the world’s leading offshore jurisdiction, home to almost 10,000 funds, has asked accountancy firm Ernst & Young to carry out an anonymous online poll on the optimum number of directorships.
Cayman Islands to open up to scrutiny – Financial Times – January 2013
The Cayman Islands are poised to break with decades of secrecy by opening thousands of companies and hedge funds domiciled on the offshore Caribbean territory to scrutiny.
The British overseas territory, which wants to shed its reputation for clandestine financial activity, is introducing sweeping reforms that will make public the names of thousands of previously hidden companies and their directors.
In proposals sent to Caymans-based hedge fund businesses and seen by the Financial Times, the islands’ powerful monetary authority, CIMA, has outlined plans to create a public database of funds domiciled on the island for the first time. The database will also list funds’ directors, pending an ongoing consultation process due to close in mid-March.
Identifying and Addressing the Primary Conflicts of Interest in the Hedge Fund Management Business – Hedge Fund Law Report – January 2013
By John Ackerley
Regulators are increasingly keen on scrutinizing how fund managers address conflicts of interest. Norm Champ, then-Deputy Director of the SEC’s Office of Compliance Inspections and Examinations, spoke about conflicts at a May 2012 seminar held at the New York City Bar Association. The SEC has indicated that it intends to scrutnize fund managers’ handling of conflicts of interest during “presence examinations” of newly-registered managers to be conducted in the next two years.
In addition, the FSA has expressed its own concerns with asset managers’ handling of conflicts of interest by penning a “Dear CEO” letter to asset managers identifying areas where it has particular concerns. Moreover, regulators have initiated enforcement actions to address conflicts of interest that were not appropriately managed, handled and documents.
Growing Pains – International Financial Law Review – September 2012
By Chris Day
As Asia’s hedge funds become more global, they face greater investor demands. Here’s why corporate governance concerns are proving key.
Fund governance and conflicts of interests have risen to the top of hedge funds’ operational due diligence agendas. Since 2008 there has been increasing concern about the transparency of hedge funds and the need for investor reassurance, which has led to demands for more reactive fund boards.
Asian hedge funds need to rise to corporate governance challenge – The Asset – September 2012
By Chris Day
The topic of fund governance is moving quickly to the top of the agenda for investors in hedge funds. Institutional investors, now representing over 60% of the global hedge fund asset base, are in the driving seat when it comes to governance standards in alternative investment funds.
In the wake of the 2008 financial crisis, they are asking managers to provide evidence that independent directors have been appointed to offshore fund boards, and that these directors are truly independent.
As the Asian hedge fund industry matures, we are seeing growing hedge fund firms with solid track records seeking to tap institutional capital pools, frequently using offshore funds in the Cayman Islands or via UCITS funds in Ireland or Luxembourg. It is important that aspiring hedge fund managers realise the higher standards of governance that investors now demand if they are going to succeed in building successful businesses.