Life Style Extra – The Financial Services Authority said it has increased the amount of data collected from hedge fund managers due to the significant proportion of London market equity volumes thatcan now be attributed to them.
In the UK regulator’s annual report, published today, chief executive John Tiner said the FSA focused on specific aspects of hedge funds activity, such as market conduct, the determination of marketvalues of complex and illiquid financial instruments, and the management of conflicts of interest – including those arising from so-called side letters.
Side letters give certain investors preferential terms – such as cheaper fees or shorter lock-ups – to incentivise them to invest in the funds. While side letters are not illegal, there is an issuewhether they are being properly disclosed to all the funds’ investors. If not, a fund could be breaching its fiduciary duty to be fair and equitable to all investors.
