Alts Fund Managers Step Up Governance Focus — Evening Brief – 08.16.24

A raft of fines and sanctions over the past two years has driven alternative fund managers to ramp up governance, according to research by compliance experts Bovill Newgate and fund administrator Ocorian.

Nearly all (99%) senior leaders and senior compliance and risk executives surveyed at alternative fund manager firms which collectively manage around $132.25 billion, say the board and senior management at their firm already take governance seriously – with 54% saying they take it very seriously. Almost all (93%) say the board and senior management already have the required blend of skills to conduct its duties correctly and have effective roles in place to manage and mitigate governance risks.

However, the research found that nearly two thirds (65%) of the fund managers surveyed had been subject to governance-related fines or sanctions in the last two years. An additional 12% said they had received an information request or visit from the regulator in the last two years.

While 70% say their organization has already increased its focus on governance during the past two years, a number of contributing factors including the numbers of governance related fines and sanctions has led to more than 90% saying that they see the focus their organization places on governance increasing over the next 24 months. Of these, 30% say this will increase dramatically.

There are many ways in which this increase in focus can be achieved but of those surveyed, almost all (96%) say it’s important for their organization to use an independent specialist risk and compliance company. Over half (55%) say it’s very important and only 4% say it’s not important.

“The alternative fund managers we surveyed have always taken governance extremely seriously, but the regulatory landscape is constantly changing and becoming even more complex, particularly for the global firms,” said Paul Ford, head of regulatory and governance, at Bovill Newgate.