Best practice recommendations seek to restore investor confidence

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WASHINGTON DC - The Managed Funds Association (MFA) is aiming to restore investor confidence in the markets with the release of its 2009 edition of Sound Practices for Hedge Fund Managers.

The 2009 edition provides updates and revisions for voluntary adoption by hedge fund managers with recommendations on disclosure to investors. The report suggests a framework, governance and policies and procedures for valuations of assets.

It offers policies and procedures for management of trading operations including relationships with counterparties and service providers. Information is given on valuation policies, risk management and trading and business operations compliance.

The MFA said its guidance should help strengthen business practices of the hedge funds. It includes a code of ethics as well as general principles around crisis management and disaster recovery.

Richard Baker, MFA president and CEO, believes investors can benefit from reviewing the recommendations before making an investment.

He said the hedge fund industry has a role to play in helping restore financial stability and investor confidence as well as economic recovery.

"The hedge fund industry is taking steps to restore investor trust through the promotion of sound business practices and tools for investors to use as they conduct ongoing due diligence of money managers," he added.

The report incorporates the recommendations provided in the final President's Working Group's best practices for the hedge fund industry report.

MFA, the PWG Asset Managers' Committee and the Alternative Investment Management Association (AIMA) have committed to providing the Financial Stability Forum with a set of unified principles of best practices before April 30, 2009.