Hedge Funds Partner Joel Wattenbarger Discusses Marketing Model Data in HFM Compliance

In The News
January 17, 2018

A Jan. 12 article in HFMCompliance titled “Best practice for hedge funds using hypothetical and model performance” outlines best practices for hedge funds managers when using hypothetical performance or model data in marketing efforts. Hedge funds partner Joel Wattenbarger is quoted in the piece.

To avoid pitfalls and regulatory scrutiny when relying on this data, Mr. Wattenbarger advises managers to “very fulsomely and very clearly” disclose the nature of the model or hypothetical performance and how the manager arrived at the numbers presented. “If you’re going to show model performance or hypothetical performance then you need to give investors and prospective investors enough information about what you’re showing them and how you derived what you’re showing them so they aren’t misled and they understand what they are looking at,” Mr. Wattenbarger adds.

Mr. Wattenbarger also highlights that  “the CCO needs to have a good understanding of how the numbers are generated. The CCO should meet with the finance and operations people generating these performance figures to walk you through step-by-step how the performance numbers are generated and if that matches up with the disclosures made to investors.”