The liquidity crisis and the new hedge found

After 12 years working for various hedge funds,emily thomas laid off as a managing director with one of the midsize funds in january 2009. As the sub-prime and liquidity crisis worsened,the fund she managed,in the media industry,was actually doing fairly well.Unfortunately,several of her colleagues in the hedge funds other industry sectors had taken huge gambles,which did not pan out.as a result,the hedge funds investor were clamoring to redeem their investments,and emily was let go us part of a consolidation. Sitting in a small restaurant just off water street in lower manhattan with two friends,guy and bill,the three decided if they were wver going to start their own hedge fund,now was the time, The time to start something like this is at the bottom,not at the top. As guy put it,so the three of them began making plans. They pooled their saving and incorporated as EGB funds.

Because of regulatory and tax issues,there is much more to starting a hedge fund than just hanging a sign on the door. The fund must have local accounting and valuations expertise.for example U.S. investors expect accounting reports to follow America’s generally accepted accounting procedures, or GAAP. Many hedge funds establish a master-feeder structure to attreact investors capital in a tax efficient way. This involves establishing on and offshore feeder funds,which in turn intrest directly into the master fund,where all trading activity takes place. In the past , most funds performed everything from trading to back office support in-house. The rationale was that with much specialized work to do,the hedge fund operators want total contol of all the operations. Increasingly, however fund manager have been outsourcing some activities to cut costs.but like all funds,EGB will have to appoint an internal fund manager. That person will in turn essentially be the operational head of the firm. He or she will work with lawyers to establish the funds corporate legal structure. Here she will have to make sure that all of the necessary policies and procedures are clearly documented and in place:for a financial institution such as this, these necessarily include not just the usual office administrative types of matter but also, for instance anti-money laundering procedures for investors. In addition the fund manager( In this case,working with Emily,Guy,and Bill) will find and rent office space and determine staffing requirements.

Given all ofthe legal comliance,andaccounting issues they face, the minutiae of staffing the company and instituting human resource policies and procedures frankly seemed secondary. On the other hand they were not foolish and they understood at its heart, their hedge fund was going to be no better than the people that they hired. They planned to hire about seven people including a fund manager,chief financial officer ,and a secretary,receptionist. Knowing that you are a human resource management expert,they have come to you for advice. Here’s what they want to know.