Hedge Fund 'Best Practices'
Aimed at Improving Markets
By MAYA JACKSON RANDALL
April 15, 2008 11:56 a.m.
WASHINGTON -- Treasury Secretary Henry Paulson called on the hedge-fund industry to implement new business guidelines released Tuesday, saying they will help improve ailing financial markets.
Two advisory panels Tuesday released separate reports for the President's Working Group on Financial Markets that call for new business practices in the hedge-fund industry, an industry that has grown to 8,000 funds with close to $2 trillion in assets.
"As these recommendations are implemented and these best practices are adopted by market participants, we are taking further steps to support the process of normalizing our financial markets today and to protect against future systemic risk," Mr. Paulson said in prepared remarks. (See the full text of Paulson's speech.)
He added that while the recommendations from the financial community are aimed specifically at the hedge fund industry, they mirror "the spirit and intent" of the wide-ranging proposal the President's Working Group announced last month for enhancing market transparency and risk management.
"We must implement best practices and continually seek to strengthen our market and regulatory practices," Mr. Paulson said.
The advisory groups were formed last September to produce recommendations for the President's Working Group.
The resulting reports outline a voluntary approach to improve practices by those who manage hedge funds and those who invest in them.
"The hedge fund industry has a critical responsibility to adopt strong business practices that reflect both its growth and the important role it plays in global financial markets," said Eric Mindich, chairman of the asset manager's advisory panel and chief executive of Eton Park Capital Management.
Meanwhile, the head of the investors' advisory panel said the comprehensive set of best practices should lead to a healthier industry.
"Taken together, these reports are intended to provide the ingredients for healthier hedge funds, for healthier investment practices in those funds, and for a healthier impact of hedge funds on the capital markets in general," said Russell Read, chief investment officer of the California Public Employees Retirement System and chairman of the investors' panel.
--Judith Burns contributed to this report.
Write to Maya Jackson Randall at Maya.Jackson-Randall@dowjones.com |
