Can independent fund directors do more to prevent fraud? Should directors be viewed by fund investors as de-facto fraud prevention officers? If the answer is yes then what more should they be doing? And if the answer is no then do investors’ due diligence teams need to spend even more time than they do already digging around to try and ensure that nothing fraudulent could happen?

The fraud question is worth raising for three reasons. First of all there has been a lot in the mainstream financial press about the problems at Platinum and some other frauds recently.

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There is a growing body of evidence that institutional investor involvement in fund governance matters is on the increase. And, more importantly, interventions by investors in fund governance are also become more effective. They are starting to exert their influence in ways that few would have envisaged a few years ago.

In Europe much of this is thanks to AIFMD. AIFMD is the first regulatory measure to introduce the concept of a governance responsibility around risk. It has taken investors some time to cotton on and appreciate what this means for them.

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