I was honored today to attend the launch of our tenth CAIA chapter – CAIA Hong Kong. Since opening our first chapter in London four years ago, we've seen a rapid growth in member activities around the world.

I am constantly impressed and amazed by the commitment of CAIA members to develop their local networks and hold educational events like the one we had tonight. This turned out to be a "standing room only" event—with a remarkable show rate of 70-plus members, candidates and guests, who were all eager to increase their knowledge and celebrate the launch of the new Asian CAIA stronghold.

The Hong Kong chapter executives (Manoj Ram Dani, Gunther Jost, Austin Mok, Wingee Sin, Barbara Wang and Robin Wattinger) outdid themselves by organizing a stimulating panel discussion and wonderful celebration at the historic and venerable China Club. My heartfelt congratulations go out to this solid and enthusiastic team. I know we can look forward to many more great educational programs from our newest chapter in the coming years.

Entitled "The Alternative Investment Industry in 2010: A Global Perspective", the evening's panel discussion, moderated by your's truly, featured Todd Groome (Non-executive Chairman of AIMA and Managing Director of Diversified Global Asset Management), Florence Lombard, member of the CAIA Association's Board of Directors and the Executive Director, of AIMA), and Peter Douglas (member of the CAIA Association's Board of Directors, AIMA Council Member for Asia-Pacific, Principal, GFIA Pte Ltd).

Many interesting issues arose in the course of the discussion but perhaps most interesting of all came from a question posed by Chapter Exec Member Gunther Jost regarding the occurrence of fraud within the Hedge Fund industry in particular. Several key points were made by the panelists including the following:

• Given the size of the industry, the number of cases of fraud has been quite small in reality.
• That said, Todd Groome emphasized that this issue is potentially the most damaging to the overall health of our industry
• You can never ensure that fraud will not occur
• Regulators have three objectives: to protect investors, guard against systemic risk and prevent fraud.
• The first is the easiest to address through clearly written, transparent offering documentation highlighting the risks, fees and redemption terms associated with the specific strategy
• The second is tougher because it requires regulators to share information across geographic regions. But it is achievable, moreover essential in a market that is global and where capital is free-flowing.
• The last is nearly impossible for regulators to implement. In part this is because fraud, by definition, cannot be regulated or legislated. Rules will never prevent fraud from occurring.

What can help tremendously, however, is effective supervision. Regulators must maintain a close dialogue with industry and pursue any leads/suspicions with vigor.

Having the requisite knowledge and skills of a CAIA designee will arm regulators with the ability to ask the probing, difficult questions needed to reveal if a manager is in fact being honest and forthright.

This concluded the panel discussion allowing the celebration to continue in earnest.

Once again, congrats to the HK executive for organizing this thoughtful event. We look forward to a bright future for this chapter.

Craig Asche
Executive Director