SOURCE: Institutional Investor

Institutional Investor

November 11, 2009 01:00 ET

Morgan Stanley, BNP Paribas Are Hedge Funds' Top Brokers, According to Institutional Investor Survey

Madoff Scandal Fuels a Surge in Demand for Third-Party Administrators

NEW YORK, NY--(Marketwire - November 11, 2009) - Morgan Stanley is the prime brokerage preferred by hedge fund managers with more than $1 billion in assets in the fifth annual Alpha Awards, which rank the top service providers as chosen by managers of hedge funds large and small.

The complete list of winning firms and analysts can be found on our web site, www.iimagazine.com.

BNP Paribas is the broker of choice among managers of funds with less than $1 billion.

The awards, which originated in Institutional Investor's sister publication Alpha and are being published for the first time in Institutional Investor this year, rank service providers in five broad categories: accounting, administration, law firms (onshore and offshore), and prime brokerage.

Administrators -- regardless of what size hedge funds they service -- report that business has never been more brisk, even though total hedge fund assets are still down about $400 billion from their 2008 peak of $1.9 trillion, according to Chicago-based Hedge Fund Research. The unprecedented $65 billion investment fraud perpetrated by Bernard Madoff underscored the importance of independent, third-party administration.

"Largely because of events such as Madoff and the collapse of Lehman, there's a drive from investors to see self-administered funds have third-party administration involved," says Cory Thackeray, head of Goldman Sachs' administrative services group, which is ranked No. 1 for a third straight year among managers of large hedge funds.

The financial crisis has also sparked a surge in business for law firms serving the hedge fund industry. With fund launches down precipitously and liquidations at record levels, restructuring has become the name of the game.

"This was a year in which you needed, as a hedge fund lawyer, to have not just legal experience but real business experience to add that value to clients," observes Steven Nadel, one of seven partners in the investment management group at Seward & Kissel, in first place as the onshore law firm of choice among managers of bigger hedge funds.

The complete list of winning firms and analysts can be found on our web site, www.iimagazine.com.

For more information about this ranking, please contact Michele Bickford at mbickford@iiresearchgroup.com or (212) 224-3360.

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