05/10/2011 Author: Will Wainewright

Aima plans director DDQ guidelines

The Alternative Investment Management Association (Aima) is collaborating with high-profile industry investors on a prototype due diligence questionnaire (DDQ) aimed at hedge fund directors, HFMWeek has learned.

The project is in its early stages but could result in the production of a questionnaire focusing on corporate governance issues that have arisen following the Weavering verdict in August. The questionnaire could be similar in type to the DDQs Aima has produced for other industry issues and areas. A source said that investors would request directors fill out the survey and talk over the results.

Universities Superannuation Scheme (USS), a major UK pension fund, and Hermes BPK, the $1.6bn fund of hedge funds manager, are believed to be contributing to the initiative on the investor side. Questions in the survey would aim to clarify: the qualifications held by directors, the number of boards they sit on and other details seen as important to good corporate governance.

Andrew Shrimpton, who specialises in regulatory compliance for consultants Kinetic Partners, supported the initiative and outlined a five-point set of questions focusing on issues an investor DDQ on corporate governance would address.

Corporate governance issues at hedge funds have risen up the agenda following the $111m fine imposed this year on Stefan Peterson and Hans Ekstrom, directors of failed hedge fund Weavering Capital, following its collapse in 2009.

The Cayman Grand Court found them guilty of “wilful neglect or default in the discharge of their duties,” causing many hedge fund investors to look more closely at how professionally directors perform their board duties. However, Robert Duggan, partner at Cayman law firm Mourant Ozannes, told HFMWeek the Weavering judgment should not be used as an excuse for the implementation of more regulation on the industry.

“I would like to see the Aima questionnaire drive greater disclosure surrounding director qualifications, capabilities and capacity and consider that in doing so it will go some way to preserving the integrity of the independent director services model.”

Aima confirmed to HFMWeek that discussions are taking place but said nothing is finalised yet.