Friday, February 02, 2007


Annual audits of hedge funds are now in full gear. Fund administrators should assist auditors in disclosure of "soft compensation" for their clients so that investors are fully informed about compensation being paid. Administrators might inquire of the hedge fund manager, (especially if trading statements show commissions exceeding $1 or so per futures contract) if the IB or Trading advisor is receiving any type of "soft compensation" back from the clearing broker or its advisors. Then quantify the additional compensation based on the # of contracts, or from a schedule of receipts by the manager, and present it to the auditor in workpaper form for appropriate disclosure to the investors.

This type of compensation is often stealth to auditors. Usually auditors will rely on the trading statements for the clearing brokers. Nowhere is soft comensation paid to the manager or IB disclosed on the monthly trading statement.

No comments:

Native American Advisors CHIPPEWA PARTNERS

My photo
CHIPPEWA PARTNERS, Native American Advisors, Inc. is a Registered Investment Advisor, founded by Dean Thomas Parisian in 1995. The firm is a manager to an exclusive clientele and is closed to new clients. As a Registered Investment Advisor, our expertise developed over 35 years balances experience, integrity and tremendous work ethic. Dean Parisian is a member at the White Earth Reservation of the Minnesota Chippewa Tribe, a former NYSE and FINRA arbitrator and trader who began his career with Kidder Peabody and later worked for Drexel Burnham Lambert in LaJolla, CA. His philanthropic interest is in Native American education and he's endowed a significant scholarship for Native Americans at the University of Minnesota. His greatest accomplishment includes raising two sons and 26 years of marriage. The Parisian family enjoys outdoor pursuits at Pamelot, their farm in Tennessee and at the Ghost Ranch, their ranch on the Yellowstone River in Montana. For media requests contact the firm via email: ChippewaPartners (at) gmail dot com, on Twitter: @DeanParisian. Global 404-202-8173