The Hedge Fund Law Report

The definitive source of actionable intelligence on hedge fund law and regulation

Articles By Topic

By Topic: Ratings

  • From Vol. 7 No.15 (Apr. 18, 2014)

    Best Practices for Hedge Fund Separate Account Risk Management

    The Asset Management Group of the Securities Industry and Financial Markets Association (whose members include hedge funds and private equity funds) recently asked its members and other notable asset managers to respond to a survey about separate accounts that they manage.  Among other things, the survey asked respondents to detail their risk management processes and the nature of their approaches toward monitoring counterparty and other risks for separate accounts.  The survey report provides detail on how the surveyed firms monitor counterparty risk for separate accounts; risk metrics typically measured and monitored on an ongoing basis in the course of management of separate accounts by the surveyed firms; and risk management processes (other than counterparty risk management) the surveyed firms typically employ in the management of separate accounts.  This article describes the survey process and the survey findings, focusing in particular on the findings related to risk management for separate accounts.  The survey findings are relevant to hedge fund managers that manage separate accounts in crafting or refining their risk management systems with respect to such accounts.  See also “BNY Mellon Study Identifies Best Risk Management Practices for Hedge Fund Managers,” The Hedge Fund Law Report, Vol. 5, No. 37 (Sep. 27, 2012).

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  • From Vol. 4 No.37 (Oct. 21, 2011)

    Defrauded Investors in “Life’s Good” Hedge Fund Ponzi Scheme Claim Fraud by Morningstar in Granting High Rating to Fund

    Plaintiffs in this action invested several hundred thousand dollars of their retirement funds in a purported hedge fund organized and managed by defendant Robert Stinson, Jr. (Stinson).  Stinson was, in fact, operating a multi-million dollar Ponzi scheme.  On August 15, 2011, he pleaded guilty to various federal criminal charges.  Plaintiffs in this action are suing Stinson and the entities through which he operated for various counts of securities fraud and common law fraud.  More important, the Plaintiffs accuse Morningstar, Inc., which gave a “Five Star” rating to the hedge fund in which Plaintiffs invested, of, at best, acting recklessly and, at worst, knowingly facilitating Stinson’s fraud.  We summarize the investors’ complaint and provide relevant details from the earlier SEC enforcement action.

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