Fund ‘jumbo directors’ and their many seats

For most investors in hedge funds, the independent directors on their funds’ board are their main fiduciaries.

In the Cayman Islands, the offshore jurisdiction where more than two-thirds of the worlds’ hedge funds are domiciled, it is common for funds’ independent board members to be full-time professionals – hired from ”fiduciary services” firms.

Until now, however, there has been no way for investors to find out just how many other fund boards such full-time independent directors sit on. The Financial Times has analysed thousands of filings lodged with the US Securities and Exchange Commission to attempt to find out.

Under US law, hedge funds are exempted from the regulations governing regular mutual funds in exchange for accepting money from a more limited range of qualified investors. Each time an investment in a Cayman-domiciled hedge fund is made from the US, the hedge fund must file a ‘form D’ exemption notice with the SEC – and this form must be signed by the fund’s directors.

The data only give a sample of the total number of directorships individuals may hold because the SEC only records when Cayman-domiciled funds are sold into the US, which is rare.

The graphic below shows the directorships that each individual is known to have held within the past four years, the period for which the SEC makes archived form D records available. Directors may no longer serve on all the boards shown, or may be members of other boards that are not listed.