Determining whether the manager of a hedge fund or private equity fund has been "naughty" or "nice" is not a particularly straight-forward question, even at the end of year with preliminary performance information at hand. To indulge in a small amount of legalease, the relationship between a fund and its fund manager is an "agency relationship." It is important to bear in mind at all times that the fund, as principal, delegates decision-making power to the fund manager, an agent.
Determining whether the manager of a hedge fund or private equity fund has been "naughty" or "nice" is not a particularly straight-forward question, even at the end of year with preliminary performance information at hand. To indulge in a small amount of legalease, the relationship between a fund and its fund manager is an "agency relationship." It is important to bear in mind at all times that the fund, as principal, delegates decision-making power to the fund manager, an agent.
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