Two private-sector committees established by the President’s Working Group on Financial Markets released sets of best practices for those that buy hedge funds, and those that run them, today, in an effort to increase accountability in that corner of the industry.

The best practices for the managers call on hedge funds to adopt comprehensive best practices in all aspects of their business, including the areas of disclosure, valuation, risk management, business operations, compliance and conflicts of interest.

The best practices for investors includes a Fiduciary’s Guide and an Investor’s Guide. The Fiduciary’s Guide provides recommendations to individuals charged with evaluating the appropriateness of hedge funds as a component of an investment portfolio. The Investor’s Guide provides recommendations to those charged with executing and administering a hedge fund program once a hedge fund has been added to the investment portfolio.

The recommendations were designed to be consistent with the work that was done in the UK to improve hedge fund oversight.

“As we said when announcing these committees — we want the world’s highest investor protection standards; we want to guard against systemic risk and keep the United States the most competitive financial marketplace in the world. As these committees were formed, their chairmen and the PWG believed that markets benefit when experienced and respected participants develop best practices and new accountability standards,” said U.S. Treasury secretary Henry Paulson, Jr., who chairs the PWG. “These are important issues, and these recommendations represent tangible steps towards our goals.”

The recommendations will be open for public comment for 60 days.