Assuming you could sit on the boards of directors at a whole mess of hedge funds, what would your limit be? “There are people who are notorious for accepting any number of appointments — there are individuals who have 500 appointments,” says Vijayabalan Murugesu, deputy managing director of the Ogier fiduciary services team in the Cayman Islands.
It seems a shameless situation, considering the battering the hedge fund industry has taken in the past year, a performance that, although better than that of the broader equity markets, has still raised questions about hedge fund directors, who are supposed to oversee things. Hedge fund boards have traditionally been all but invisible, and their role in hedge fund oversight has been murky, to put it nicely. But critics have increasingly begun to question the competence of directors, and the tough times of late have fueled investor demand for answers.
The relaxed attitude many boards seem to have is rooted in part in the explosive growth in the industry that saw demand exceed the supply of qualified candidates. The result: Individuals signed on — at least in name — to be directors at a ridiculous number of funds. Steven Whittaker, head of the hedge fund practice at London-based law firm Simmons & Simmons, says he knows of one person with 364 directorships — essentially one for each day of the year. Mark Lewis of law firm Walkers Group in the Caymans counts 26 directors who are board members of more than 100 hedge funds apiece.
Part of the reason there aren’t more truly qualified directors is that the job can be daunting, explains Don Seymour, founder of dms Management, a Cayman-based supplier of outside directors. “Serving as an independent director has evolved from a part-time practice at the kitchen table to a full-time practice in the boardroom.”
