Sound Practices for Hedge Fund Managers

The Managed Funds Association updated its Sound Practices for Hedge Fund Managers (.pdf) in November, 2007 in response to the initial drafts of the President’s Working Group on Financial Markets.

The objectives of Sound Practices are to:

  • Strengthen business practices of the hedge fund industry through a strong framework of internal policies and practices
  • Encourage individualized assessment and application of recommendations
  • Enhance market discipline in the global financial marketplace

Sound Practices, which was originally published in 2000 and is now in its fourth edition, provides peer-to-peer recommendations for establishing standards of excellence in virtually every aspect of business. The recommendations included in Sound Practices are divided among the seven topics listed below:

  • Management, Trading, and Information Technology Controls
  • Responsibilities to Investors
  • Determination of Net Asset Value
  • Risk Management
  • Regulatory Controls
  • Trading Relationship Management, Monitoring, and Disclosure
  • Business Continuity, Disaster Recovery, and Crisis Management