The Big 12: Merlin’s Best Practices For Hedge Funds
Note: Ron Suber, senior partner at Merlin Securities, presented the following paper at the second annual
SkyBridge Alternatives (SALT) Conference on Wednesday, May 19, 2010.
Managers who meet these Big 12 Best Practices and generate Alpha can seize the growth
opportunities in the marketplace.
1. Written compliance and employee trading policies with periodic attestation
2. Multiple levels of authority on cash movements with a minimum of two people
controlling input, release and approvals
3. Written and consistent valuation policy by asset class
4. Sound technology and infrastructure with reliable back-up, disaster recovery and
business continuity plan
5. Open architecture to handle multiple prime brokers, multiple custodians and
managed accounts; understand why these firms are used and the alpha they
6. Clear risk management methodology
7. Ability to prove best execution
8. High-quality audit, tax and legal representation
9. Sustainable third party administration with SAS 70 Type II
10.Dedicated operations manager, COO, CFO and CCO
11.Significant principal’s money in the fund
12.Daily position and cash reconciliation
Ron Suber is senior partner and head of global sales and marketing for Merlin Securities, a leading prime
brokerage services and technology provider for hedge funds and managed account platforms.