Any explanation of the investment process to investors or potential investors should accurately represent what happens in practice and be broadly adhered to thereafter.

A Hedge Fund manager’s investment process should:

1. define, at a high level, the steps to be undertaken before an investment decision is taken;
2. identify any investment restrictions such as investment type, position size, concentration limits, short/long balance, amount of leverage, geographical, market, regulatory constraints and risk limits;
3. consider whether an investment decision would result in a conflict of interest and, if so, how such a conflict may be appropriately managed;
4. ensure that any investment decisions made comply with the provisions of applicable regulation relating to market abuse or insider trading;
5. identify who has actual authority to make investment decisions and any limits on such authority;
6. identify who has responsibility for overseeing the investment decision process and monitoring investment decisions against any internally or externally defined limits;
7. identify who has authority to place orders in the market;
8. design procedures and define responsibilities for identifying and ensuring compliance with local market regulations; and
9. document all of the above.