Hedge Fund Compliance: Risks, Regulation, and Management

Develop a Compliance Program to Enrich Your Hedge Fund

Hedge Fund Compliance is the much–needed, practical guide to hedge fund compliance in today′s global and increasingly scrutinized financial industry. Regardless of how you define success in the hedge fund industry, a thorough grasp of compliance concepts and best practices is mandatory, and this A–to–Z guide to the subject gives you the background, up–to–date information, and real–world abilities to enhance any hedge fund with a state–of–the–art compliance program. Discover how a strategic compliance program can improve operating efficiency, clarify communication throughout a hedge fund, and attract investors with its oversight and transparency. This complete solution enables you to:

Master high–level techniques for designing and running a robust hedge fund compliance program Download ready–to–use documentation templates and timesaving checklists from a companion website Evaluate and monitor a hedge fund′s compliance program from an investor perspective

Get the essential foundation and practical skillset you need to avoid costly pitfalls and thrive in one dependable resource Hedge Fund Compliance.

Preface

Chapter 1: Introduction to Hedge Fund Compliance

Introduction

Differences in hedge fund and other alternative fund compliance

Hedge fund compliance is not specific to one country

Do alternative investments merit special compliance considerations?

Understanding the hedge fund compliance framework

Introduction to the hedge fund compliance function

Distinguishing the legal and compliance departments

Key players in compliance

Standard areas covered by a hedge fund compliance function

Compliance function roles and authority

Chapter Summary

Chapter 2: Introduction to Hedge Fund Regulation and Examination

Introduction

Different types of regulation for different financial entities

Why Regulation Is Needed

Where do compliance rules come from?

National and Global Jurisdiction

Common regulatory interaction with hedge funds

Regulatory examinations

Chapter Summary

Chapter 3: The Chief Compliance Officer and Regulatory Reporting

Introduction

Introducing the Chief Compliance Officer

Regulatory Reporting

Regulatory reporting in multiple jurisdictions

Common regulatory reporting questions

A Multi–Step Process

Chapter Summary

Chapter 4: In–House Compliance Professionals and Hedge Fund Committees

Introduction

Common compliance function tasks

Firm committees as compliance mechanisms

Chapter Summary

Chapter 5: Hedge Fund Compliance Technology

Introduction

Understanding the hedge fund information technology function

Primary compliance uses of technology

Compliance considerations for use of electronic data

Compliance oversight of non–electronic data

Business continuity and disaster recovery planning

Chapter Summary

Chapter 6: Compliance Consultants and Other Compliance Related Service Providers

Service provider compliance

Classification of compliance service providers

Service provider compliance work

Hedge fund compliance consultants

Chapter Summary

Chapter 7: Understanding Key Compliance Documentation

Reasons for documenting compliance policies and procedures

Understanding the goals of compliance documentation

Jurisdictional differences in compliance documentation

Understanding boilerplate documentation

Core compliance documentation

Chapter Summary

Chapter 8: Investor Evaluation of Hedge Fund Compliance Functions

Introduction

Compliance evaluations in investor due diligence

Initial and ongoing compliance analysis

Evaluating best practice compliance

Key compliance analysis areas

Chapter Summary

Chapter 9: Case Studies and Example Scenarios in Hedge Fund Compliance

Introduction

Compliance Scenario #1

Compliance Scenario #2

Case studies

Chapter Summary

Chapter 10: Common Compliance Pitfalls and How to Avoid Them

Introduction

Pitfall #1: Small firms build large firm compliance infrastructures

Pitfall #2: Under spending on compliance

Pitfall #3: Lack of independent compliance reporting

Pitfall #4: Outsourcing all compliance

Pitfall #5: Relying on technology and compliance automation

Pitfall #6: Letting investor opinion drive compliance priorities

Chapter Summary

Chapter 11: Interviews With Compliance Service Providers

Introduction

Interview with Kent Wegrzyn (ACA Compliance Group)

Interview with Vinod Paul (Eze Castle Integration)

Chapter Summary

Chapter 12: Trends and Future Developments

Introduction

Chief Compliance Officers personal liability concerns

Increased senior manager regulatory accountability

Compliance–related insurance increases

Increased coordinated hedge fund regulation in Europe

Chapter Summary

About the Author

About the Companion Website

Index

JASON A. SCHARFMAN is managing partner of Corgentum Consulting, a consulting firm specializing in operational due diligence reviews and background investigations of fund managers on behalf of investors. A leading expert in the field of due diligence, he is author of Hedge Fund Governance, Private Equity Operational Due Diligence, and Hedge Fund Operational Due Diligence.