Juan Toro

Hedge fund managers usually have a stake in the fund they run in order to align their interest with those of the fund they manage. This guarantees that they do not take excessive risk as part of their own wealth is at risk. The problem is that when managers get married -and divorced- part of their own wealth is not only theirs but also shared with their partners. This has created some problems on the comitment of the manager`s wealth into the fund. The problem would disappear if both partners run the same fund, so that even in case of divorce both partners would have the same amount of wealth in the fund before and after the rupture. But this is hard to picture.

See editorial of the FT on post-nup agreements for hedge-fund managers
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Posted on 3 Junio 2007 in Financial Markets

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