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Personal trading policies for hedge fund managers

Thomas S. Harman (Partner, Morgan, Lewis & Bockius LLP, Washington, DC, USA (tharman@morganlewis.com))
Monica L. Parry (Counsel at Morgan, Lewis & Bockius LLP, Washington, DC, USA, (mparry@morganlewis.com))

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 1 April 2006

620

Abstract

Purpose

To provide a detailed description of personal trading policies that apply to hedge fund managers.

Design/methodology/approach

Summarizes Sections 206(1) and (2) of the Investment Advisers Act of 1940 (“Advisers Act”), particularly with regard t disclosure of conflicts relating to personal trading and and prevention of misappropriation of investment opportunities; summarizes Section 204A of the Advisers Act, including procedures designed to prevent the misuse of public information; and summarizes Rule 204A‐1 under the Advisers Act, which requires a registered investment adviser to adopt a code of ethics applicable to its supervised persons.

Findings

Advisers must adopt insider trading policies, ensure clear and accurate disclosures about personal trading in their Forms ADV and private placement memoranda, and adopt and enforce codes of ethics. It is also beneficial for an adviser to require its employees to trade only through an affiliated broker‐dealer.

Originality/value

Provides a detailed discussion of personal trading policies that apply to hedge fund managers.

Keywords

Citation

Harman, T.S. and Parry, M.L. (2006), "Personal trading policies for hedge fund managers", Journal of Investment Compliance, Vol. 7 No. 2, pp. 34-42. https://doi.org/10.1108/15285810610711518

Publisher

:

Emerald Group Publishing Limited

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