Hedge Fund Contracts

Druckenmiller Lawyer Takes On Hedge Funds Over Contracts - Bloomberg: January 28, 2014

"Stan Druckenmiller, one of the top-performing money managers of the past three decades, discovered a hard truth when he started investing in other hedge funds: Most don’t treat their clients fairly. Partnership agreements frequently leave investors on the hook for legal fees associated with the misconduct of fund employees, or allow managers to unilaterally suspend redemptions for any reason, Gerald Kerner, Druckenmiller’s lawyer since 1997, wrote in a paper presented yesterday to a group of endowments and foundations.Now Kerner is fighting back, pushing for changes in an industry where managers wield clout with their investors and typically charge the highest fees in the asset-management business. He is urging investors to push for contract changes and refuse to invest with funds that won’t agree to change their terms.The unfair provisions “can cost investors many millions of dollars down the road if not remedied,” Kerner wrote in the 14-page paper titled: “Hedge Funds: Problems Under the Hood.” Paula Volent, senior vice president for investments at Bowdoin College presented that paper yesterday at the NMS Management Inc. conference in Scottsdale, Arizona. She’ll also talk about it on Jan. 29 at Morgan Stanley’s hedge-fund conference at the Breakers in Palm Beach, Florida. . . ." (read more at link above)