Hong Kong Securities and Futures Commission (SFC) highlights operating, control and compliance deficiencies in asset management industry

2018 ◽  
Vol 19 (1) ◽  
pp. 63-68 ◽  
Author(s):  
Anne-Marie Godfrey
Keyword(s):  
Hong Kong ◽  
Asset Management ◽  
Service Providers ◽  
Governance Structures ◽  
Investment Fund ◽  
Extensive Experience ◽  
Investment Funds ◽  
Content Type ◽  
Best Execution ◽  
Asset Managers

Purpose To examine the nine common areas of non-compliance in managing investment funds and discretionary accounts, detailed in a Hong Kong Securities and Futures Commission (SFC) circular dated September 15, 2017, directed at SFC-licensed asset managers. Design/methodology/approach Discusses a July 2017 circular indicating the SFC’s general concerns and analyzing the following nine common areas of non-compliance cited in the September 15, 2017 circular: (1) inappropriate receipt of cash rebates giving rise to apparent conflicts of interests, (2) failure to follow investment-suitability and discretionary account mandates during solicitation, (3) failure to implement liquidity-risk management processes, (4) deficiencies in governance structures and fair-valuation procedures, (5) deficiencies in systems for ensuring best execution, (6) failure to safeguard fair order allocation, (7) inadequate controls for protection of client assets, (8) inadequate systems to comply with investment restrictions, and (9) inadequate safeguards to address market misconduct risk. Findings The nine examples of non-compliance provide a useful insight into key “problem areas” indicated to currently be of particular concern to the SFC. Practical implications All SFC-licensed asset managers would be well advised to revisit their internal governance structures and operational policies and procedures in order to ensure that they are compliant with applicable standards and requirements. Originality/value Practical guidance from a lawyer with extensive experience advising investment managers and advisers, fund administrators, trustees and other fund service providers on investment fund-related issues.

Portraits of five hedge fund fraud cases

2008 ◽  
Vol 15 (2) ◽  
pp. 179-213 ◽  
Author(s):  
Majed R. Muhtaseb ◽  
Chun Chun “Sylvia” Yang
Keyword(s):  
Asset Management ◽  
Hedge Funds ◽  
Hedge Fund ◽  
Investment Fund ◽  
Good Opportunity ◽  
Content Type ◽  
Fund Managers ◽  
Management Group ◽  
Fund Industry ◽  
Asset Managers

PurposeThe purpose of this paper is two fold: educate investors about hedge fund managers' activities prior to the fraud recognition by the authorities and to help investors and other stakeholders in the hedge fund industry identify red flags before fraud is actually committed.Design/methodology/approachThe paper investigates fraud committed by the Bayou Funds, Beacon Hill Asset Management, Lancer Management Group (LMG), Lipper & Company and Maricopa investment fund. The fraud activities took place during 2000 and 2005.FindingsThe five cases alone cost the hedge fund investors more than $1.5 billion. Investors may have had a good opportunity for avoiding the irrecoverable costs of the fraud had they carefully vetted the backgrounds of the hedge fund managers and/or continuously monitored the funds activities, especially during turbulent market environments.Originality/valueThis is the first research paper to identify and extensively investigate fraud committed by hedge funds. In spite of the size of the hedge fund industry and relatively substantial level and inevitably recurring fraud, academic journals are to yet address this issue. The paper is of great value to hedge funds and their individual and institutional investors, asset managers, financial advisers and regulators.

Guernsey as an investment funds domicile: benefits and regulations

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
By Annette Alexander ◽  
Christopher Andersen ◽  
Andrew Boyce ◽  
Tom Carey ◽  
David Crosland ◽  
...  
Keyword(s):  
Design Methodology ◽  
Service Providers ◽  
Regulatory Regime ◽  
Investment Fund ◽  
Investment Funds ◽  
Content Type ◽  
Legal Structure

Purpose To explain the benefits and the regulations pertaining to Guernsey as a domicile for investment funds. Design/Methodology/Approach Explains the benefits of Guernsey as a fund domicile, the regulatory regime, and the types of fund vehicles used in Guernsey, registered and authorized. Findings Guernsey is one of the world’s largest offshore finance centers, with a thriving funds industry. The benefits of Guernsey as a fund domicile are substantial, including a proportionate, flexible and competitive funds regulatory regime, a stable political and legal structure, and a wealth of first-class fund service providers. Originality/Value Expert guidance from experienced investment-fund lawyers.

Performance of physical asset management using the analytic hierarchy process

2019 ◽  
Vol 37 (3) ◽  
pp. 327-345 ◽  
Author(s):  
Fawzeia Abdulla Al Marzooqi ◽  
Matloub Hussain ◽  
Syed Zamberi Ahmad
Keyword(s):  
Analytic Hierarchy Process ◽  
Asset Management ◽  
Analytic Hierarchy ◽  
Content Type ◽  
Equal Importance ◽  
The Analytic Hierarchy Process ◽  
Physical Asset ◽  
The Impact ◽  
Hierarchy Process ◽  
Asset Managers

Purpose The purpose of this paper is to explore certain resources, capabilities and competencies needed to improve the performance of physical asset management (PAM). Design/methodology/approach The analytic hierarchy process (AHP) is used to select and prioritize the most appropriate factors for improving performance. A multi-criteria approach is used to analyze and compare the importance of 6 main criteria and 18 subcriteria identified from a survey of relevant literature. Findings The study revealed that not all factors are viewed as having equal importance in improving PAM performance, as three of the main factors attained greater importance among the six factors. Research limitations/implications This study explored the factors required for managing assets only within the third stage of asset lifecycle, that is, the utilization stage. It is recommended that future studies be conducted in such a way as to determine the importance of similar factors in the other stages of the asset lifecycle, or to identify new factors and add new criteria. Practical implications Knowledge of the differential impacts of the factors on the performance of PAM can impact asset managers and decision makers in their allocation of resources and focus their work on the highest-ranked rather than the lowest-ranked factors. Also, AHP used provides an effective mean for asset managers to identify priorities among decision criteria in their organization. Originality/value To date, no study has explored the impact of six combined factors on the performance of PAM. Previous studies have found that these factors each had equal importance. However, their relative ranking in practice and when they appear together have remained unrecognized.

Tight budget constraints and the absence of strategic planning

Facilities ◽  
2016 ◽  
Vol 34 (7/8) ◽  
pp. 380-393 ◽  
Author(s):  
Huiying Hou ◽  
Daniel C.W. Ho ◽  
Jacky K.H. Chung ◽  
Kelwin K.W. Wong
Keyword(s):  
Hong Kong ◽  
Strategic Planning ◽  
Qualitative Data ◽  
Service Providers ◽  
Facilities Management ◽  
Budget Constraints ◽  
Group Discussions ◽  
Service Outsourcing ◽  
Content Type ◽  
Coding Method

Purpose This paper aims to identify the factors that affect facilities management (FM) service outsourcing. Design/methodology/approach Five focus group discussions (FGDs) were conducted for this study. A total of 25 professional FM managers were invited to participate in the FGDs. The qualitative data collected from the FGDs were analysed with the coding method. Findings FM managers commonly regard that tight budget constraints and the absence of strategic planning are two important factors that affect FM service outsourcing. Tight budget constraints reflect that clients control their service providers by constraining budgets, which creates a series of inefficiencies in the outsourcing process and thus lead to adverse outsourcing relationships. A series of strategies are recommended to deal with the challenges posed by budget constraints and the lack strategic planning. Research limitations/implications Twenty-five Hong Kong-based FM managers were interviewed for this study. The empirical data collected mainly reflects FM service outsourcing in Hong Kong. It is important to test the findings with a bigger group of FM managers from other regions. Originality/value The managerial significance of FM service outsourcing has not yet been valued in practice. This study draws academic attention to FM service outsourcing practice and provides practical opinions from FM managers. Also, this study adopts the FGD method in data collection, which extracts to a maximum degree of authentic opinions from practitioners.

Establishing an EU internal market for depositaries

2020 ◽  
Vol 28 (4) ◽  
pp. 587-603
Author(s):  
Christopher Buttigieg ◽  
Joseph Agius ◽  
Sandra Saliba
Keyword(s):  
Asset Management ◽  
Financial Stability ◽  
Mutual Recognition ◽  
Legal Framework ◽  
Internal Market ◽  
Financial Supervision ◽  
Investment Fund ◽  
The European Union ◽  
Content Type ◽  
Eu Member States

Purpose This paper aims to examine the rationale for the establishment of a depositary passport as the next logical step in building an internal market for investment funds in the European Union (EU). It makes the point that the de facto prohibition of depositary passporting poses risks to financial stability and has an adverse impact on investor protection in EU member states, which do not have a fully developed funds industry. Design/methodology/approach This paper analyses both the arguments in favour and against the adoption of a depositary passport. Moreover, it examines this proposal in the context of different approaches to fostering the internal market such as mutual recognition, harmonisation of regulation, reflexive governance of financial supervision and centralised supervision. Findings Based on the review of the current EU legal framework, this paper, subsequently, puts forward possible solutions for the establishment of an internal market for depositary business, which solutions have been discussed with various experts in the field to assess their feasibility in practice. Originality/value The paper contributes to the debate on the EU internal market in the field of asset management, which is topical in view of the upcoming review of the EU’s Alternative Investment Fund Managers Directive.

A game-theoretic model for roadway performance management

2014 ◽  
Vol 4 (1) ◽  
pp. 40-54 ◽  
Author(s):  
Hesham Osman ◽  
Mazdak Nikbakht
Keyword(s):  
Asset Management ◽  
Decision Makers ◽  
Theoretic Model ◽  
Theoretic Approach ◽  
Political Decision ◽  
Content Type ◽  
Road Users ◽  
Game Theoretic ◽  
The Impact ◽  
Asset Managers

Purpose – The purpose of this paper is to present a socio-technical approach to modeling the behavior of roadway users, asset managers, and politicians toward roadway performance and asset management. This approach models the complex interactions that occur between these agents in a complex system. Most modeling approaches in the domain of infrastructure asset management take a purely asset-centric approach and fail to address these socio-technical interactions. Design/methodology/approach – Interactions among political decision makers, asset management strategy developers, and road users are modeled using a game-theoretic approach. The interactions are modeled as a non-cooperative game in which politicians, asset managers, and road users are the main players. Each player is autonomous and aims to come up with the set of moves to maximize their respective level of satisfaction in response to other players’ moves. Multi-attribute utility theory is used to deal with multitude of players’ goals, and the Nash equilibria of the game are south out to develop appropriate strategies for different players. Findings – An illustrative example for a road network of a Canadian city is used to demonstrate the developed methodology. The developed methodology demonstrates how behaviors of various agents involved in the sphere of asset management impacts their collective decision-making behavior. Originality/value – The developed framework provides asset managers and political decision makers with a valuable tool to evaluate the impact of public policy decisions related to asset managers on road performance and the overall satisfaction of road users.

Active investment funds face rising pressure

2019 ◽  
Keyword(s):  
Asset Management ◽  
Asset Price ◽  
Equity Markets ◽  
Poor Performance ◽  
Exchange Traded Funds ◽  
Investment Funds ◽  
Content Type ◽  
Fund Managers ◽  
Price Bubble ◽  
Specific Index

Subject Passive and active fund management. Significance Active investment, actively buying and selling assets to try and outperform the market, was already under fire because of poor performance, high fees and passive funds (tracking a specific index) performing well due to the surge in global equity markets. Exacerbating this, the decision on June 2 by Neil Woodford, one of the United Kingdom's best-known fund managers, to suspend withdrawals from his flagship Equity Income Fund is triggering a scandal in UK asset management. Impacts Passive funds performing well fuels asset price bubble fears as they tend to lead to more money being directed to larger firms and sectors. Exchange Traded Funds, popular passively run vehicles, have momentum, holding almost 5.5 trillion dollars, six times as much as in 2009. The dollar may rise as geopolitical uncertainty will drive ‘safe haven’ interest but doubts over US growth and policy will cap the trend.

Jersey as an investment funds domicile: benefits and regulations

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Christopher Griffin ◽  
Robert Milner ◽  
James Mulholland ◽  
Daniel O’Connor
Keyword(s):  
International Finance ◽  
Design Methodology ◽  
Service Providers ◽  
Financial Service ◽  
Time Zone ◽  
Investment Funds ◽  
Content Type ◽  
Tax Neutrality ◽  
Limited Partnerships ◽  
International Financial Center

Purpose To explain the benefits and the regulations pertaining to Jersey as a domicile for investment funds. Design/methodology/approach Provides an overview of Jersey as an international financial center followed by a detailed description of Jersey regulations applying to private funds, expert funds, listed funds, regulated investor funds, retail and other collective investment funds (CIFs), and notification-only funds. Explains fund vehicles including unit trusts, limited partnerships, and companies. Discusses taxes and fund service providers. Findings Jersey is one of the world’s major international finance centers, offering location and time-zone benefits; stability and reliability; tax neutrality; a stable political, fiscal and regulatory infrastructure; and highly-skilled financial-service providers. Originality/value Expert guidance from experienced investment-funds lawyers

Rebsamen investment fund integration in finance education

2019 ◽  
Vol 46 (4) ◽  
pp. 565-575
Author(s):  
Samar Ashour ◽  
Craig G. Rennie ◽  
Sergio Santamaria
Keyword(s):  
Lessons Learned ◽  
Theory And Practice ◽  
Investment Fund ◽  
Professional Certification ◽  
Investment Funds ◽  
Content Type ◽  
Academic Units ◽  
College Of Business ◽  
Student Finance ◽  
Finance Education

Purpose The purpose of this paper is to describe lessons learned from integrating student-managed investment funds (SMIFs) in finance education systems based on the case of the Raymond Rebsamen Investment Fund at the Sam M. Walton College of Business, University of Arkansas. Design/methodology/approach The paper has three main parts. First, it describes how the Rebsamen Fund operates as an integral part of undergraduate and graduate finance education at the Walton College. Second, it explains how the Fund spawned creation of sister funds, an institute, a 62-seat trading center, and coordinates with other agencies and stakeholders. Third, it lists strengths, weaknesses, opportunities and threats facing future SMIF integration into finance education. Findings The use of innovative experiential learning solutions like SMIFs bridging theory and practice can be enhanced by integrating them into effective systems of finance education. Practical implications Lessons learned include benefits of SMIF management by class, licensing and professional certification, trading centers, use of SMIF finances to support other components of education, proliferation of SMIFs, SMIF stimulation of academic units like centers/institutes, SMIF facilitation of collaboration, importance of tying SMIFs to student finance clubs, coordination of industry speaker visits between SMIF classes and clubs, and use of SMIFs in addressing cutting-edge challenges. Originality/value This paper discusses how SMIFs can be integrated in finance education.

Diversification effect of ship investment funds in South Korea

2019 ◽  
Vol 23 (1) ◽  
pp. 62-74 ◽  
Author(s):  
Jae-Boong Lee ◽  
Su-Han Woo ◽  
Jeong Seok Song ◽  
Byeongchan Seong ◽  
Keun-Sik Park
Keyword(s):  
Stock Prices ◽  
Correlation Coefficients ◽  
Investment Fund ◽  
Short Term ◽  
Investment Funds ◽  
Policy Makers ◽  
Content Type ◽  
Cointegration Tests ◽  
The Government

Purpose The purpose of this paper is to examine the diversification effect of the Korean Ship Investment Fund (KSF) under Markowitz portfolio theory by analyzing short-term and long-term relationships with stocks and bonds. Design/methodology/approach For this purpose, unit root, correlation and cointegration tests are performed. Monthly data from 2004 to 2015 for stocks, bonds and KSFs are obtained for this study. Findings The correlation coefficients indicate that KSFs are uncorrelated with stocks and negatively correlated with bonds, and no long-term equilibrium relationships exist with all three variables by the Johansen and Engle-Granger cointegration tests. Research limitations/implications This paper makes contribution to the literature as follows: first, whereas the previous literature investigated diversification effect of ship investment using freight indices or freight rates which are not able to represent returns from ship investment, this study is the first study to use actual stock prices of the KSFs to the authors’ best knowledge; and second, diversification effect of ship investment represented by KSFs is empirically verified in the both short term and long term. Practical implications Policy-makers and managers of shipping companies can have sound ground that the KSFs are alternative and attractive assets to investors. It is also shown that the KSFs have potential to improve risk and return structure of investors on their own regardless of existence of incentives. Therefore, decisions of policy-makers can be made free from expectations for stronger incentives provided by the government. In addition, those countries that do not have such a ship investment platform may consider introducing a similar ship investment fund in order to revitalize the capital markets of the country. Originality/value This study holds its significance in investigating diversification properties of the KSFs for the first time in Korea since the KSFs were introduced.

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