The Managed Funds Association recommended the hedge fund industry start adhering to its latest version of “Sound Practices for Hedge Fund Managers”.

The MFA released the fourth version of its paper developing sound practices and policies for the hedge fund industry. According to MFA president John Gaine, “The updated guidance is the cornerstone of the Association’s initiative to collaborate with domestic and international organizations with the goal of establishing uniform global principles and guidance.”

The revised edition includes updated and expanded guidance on valuation, risk management and responsibilities to investors. It also introduces MFA’s first model due diligence questionnaire designed for use by all types of investors, including high net worth individuals, pension fund managers and nonprofit organizations.

According to MFA chairman Eric Vincent, the revised Sound Practices represent the hedge fund industry’s response to the President’s Working Group on Financial Markets’ call for improved market discipline and enhanced vigilance. “As hedge funds continue to be important liquidity providers and risk dispersers in the global capital markets, active industry self-oversight is crucial and will contribute to market soundness and investor protection,” he said. “MFA recognizes its responsibility to advocate sound business practices and asks all industry participants to adopt the expanded policies and procedures set forth in these recommendations.”