Hedge Fund Adminstration - Why It Is a Necessity! - Part 1

I made it a rule a long time ago, that I would only market and invest in hedge funds that use independent third party administrators. My decision was simple, with no one watching over the firm's performance and independently verifying it on a month to month basis, how could I trust the integrity of the information coming out of the firm? In addition, if they were performing their own accounting monthly, how could I be confident that they are capable of complying with GAAP? Or that they understood accounting at all?

We all know that hedge fund fraud is rampant in the hedge fund industry. Not a day goes by where we don't read about a new hedge fund manager going to jail, hiding in the woods, or taking little old ladies and charities for their last pennies. As a result of the fraud, hedge fund investors are fuming. However if they followed the same rule I have, investing in a fraudulent hedge fund becomes less of a possibility. Let's talk about how independent third party administration can help prevent fraud. First however, it is important to understand what administrators do.

Continued in Part Two of 'Hedge Fund Administration - Why It Is A Necessity!

FULL DISCLOSURE - HedgeCo Networks owns G & S Fund Services, a full service hedge fund administrator and administration firm. Evan Rapoport is a part owner and co-founder of HedgeCo Networks.

2 comments:

  1. It is my first time i visit here. I found so many entertaining stuff in your blog, especially its discussion. From the tons of comments on your articles, I guess I am not the only one having all the leisure here! Keep up the excellent work.
    Tobacco Machines

    ReplyDelete
  2. Hi,

    Thanks for this summary of the fund admin space. I think it provides a great basic understanding for any new fund manager. We just recently did a post titled "Fund Administration Overview for Emerging Managers" which can be found at http://towerfundservices.com/forum/fund-administration-emerging-managers/. I hope you and your readers find that useful!

    Thanks

    Kinjal Amin

    ReplyDelete

Welcome to the Hedge Fund Capital Introduction Blog

Hedge Fund Capital Introduction can be a crucial component to a hedge fund's growth. Most bulge bracket prime brokers offer some form of capital introduction for their larger clients but finding a solid capital introduction program for smaller clients presents a challenge. This site is designed to discuss recent events and updates within the hedge fund marketing/capital introduction space. All contributors with beneficial knowledge are urged to participate.


Hedge Fund News From HedgeCo.Net