Scrubbing prime brokerage contracts -- what can hedge fund managers learn from the fall of Bear?
Opalesque, March 19, 2008
Summary: Opalesque discusses with S3 Partners Managing Partner Bob Sloan how important it is for hedge funds to monitor the risk associated with their counterparties.
S3 Partners citations:
For some time, Bob Sloan and S3 Partners, which works on an advisory basis for hedge fund clients on their interactions with prime brokers, financing counterparties, funding programs and other financing, has been warning clients about the importance of monitoring the risk associated with their counterparties. In the months leading up to this weekend they have also counseled the funds they work with to move $25 billion out of Bear Stearns accounts. In a white paper released just last week Sloan further cautioned "Hedge fund managers should pay close attention to the collateral rights and obligations that they have with their financing counterparts... we believe that prudent hedge fund managers should put a robust process in place to address counterparty credit issues."
Sloan cautions that the end of Bear may very well have turned the prime broker service arena into a seller's market. With "a major player replaced at the table by a new entrant into the business it is conceivable that the price of balance sheet, resources, economic and legal terms for the hedge managers may go way up."
Full article at Opalesque website (subscription required). |
S3 Partners welcomes media inquiries.
S3 Partners' media contact is:
Mr. Robert Sloan, Managing Partner
robert.sloan@s3partners.net
Office: 212 715-4300
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