The Managed Funds Association passed the torch of leadership at its Network 2008 conference in Key Biscayne, Fla. in February. Former Congressman Richard Baker (R-La.) officially took the reins as president and CEO of the MFA. Former President John Gaine will stay on as special advisor on international affairs. Gaine said that bringing Baker on board was a testament to the growth of the hedge fund industry as well as the variety of issues it is facing. Baker said during the conference that many institutional investors could benefit from alternative strategies, but that the industry had to work to close a chasm of understanding regarding hedge funds. He also noted that a more principals-based approach to regulation would help both the industry and end users. “Let’s move to a principals-based approach regulatory environment,” Baker said. “To do this we have to conduct our business with the highest honor.” To meet that mandate, MFA recently published its 2007 version of Sound Practices for Hedge Fund Managers and is hosting a series of seminars across the country to highlight sound practices. Also during the conference, author Michael Covel hosted a panel in which he pointed out that the MFA began as the Managed Futures Association. Many MFA members have complained in recent years over the focus on equity-based hedge fund strategies by the MFA at the expense of its traditional core managed-futures programs.
While the panelists avoided placing blame on the MFA, they did comment on the frustration over managed futures being viewed as a more risky strategy than the myriad of hedge funds, many of which trade illiquid securities, that have caused large problems across the entire investing universe since the subprime fallout last summer.
“We need to do more as an industry to educate people on how managed futures work in a portfolio,” said Paul Wigdor of Superfund Asset Management, which operates a public commodity pool. Baker indicated during the conference that easing some of the regulatory burden on public commodity pools, which face multiple regulators, is on MFA’s agenda.
Phil Goldstein, the hedge fund manager who fought the SEC on its proposed registration rule and won, is preparing to do battle with the regulator once again. The issue this time is his ability to have a Web site. Currently hedge funds are required to restrict their Web sites to accredited investors. Goldstein is asking for no-action relief from the SEC and if he doesn’t get it, he says he will sue for declaratory relief on behalf of his fund Bulldog Investors. Goldstein says he should have the same right as any other business to have a Web site. He adds that there is a higher authority than the SEC, the U.S. Constitution.