By Sarah Wood
One of the most important pillars supporting the hedge fund industry in the United States is that, by making their allocations, hedge fund investors sign on to funds as partners. Why else would they agree to pay such huge fees? Or accept minimal transparency or long lockups?
To be sure, the foremost requirement of any hedge fund investor is performance. But the assumption has always been that the limited partnership arrangement assured, at least in practice, that managers would have an incentive to avoid blowing up their funds and would provide explanations when things went