Management turmoil…to disclose or not? (FundFire)

Recent management discord at a well-known hedge fund manager has raised questions about whether it required disclosure. The firm, Two Sigma Investments, chose to include details of “a variety of management and governance challenges” that may impact its “ability to achieve client mandates” on its annual Form ADV, Part 2 filing. The disclosure is highly unusual, according to Amy Lynch, FrontLine’s Founder and President. She comments that making the management disagreement public via the filing is not the kind of information that is typically included on Form ADV. However, Ms. Lynch notes that there are generally two schools of thought on disclosures – providing the bare minimum or being as transparent as possible – and in this case, the firm may believe the information is important enough for investors to have when making decisions. The increased regulatory scrutiny of the private funds industry by the SEC may also have played a factor in the firm’s decision. See FundFire (subscription required), “Has Two Sigma’s Feud Disclosure Forged a Hedge Fund Precedent?”