International Investor’s new list of top earning hedge funds of the last year has put them top and center of the financial industry’s news cycle. Not that they are ever far from it. That is part of what makes their online reputation issues unique.
For hedge fund managers, maintaining inner-circle confidentiality is a priority. But their rock-star status within the financial community makes that hard to achieve. With the media focusing on the private lives of top earners, it also hard to stay out of the public eye – and off the Internet. That is why privacy ranks high on my list of the top online reputation issues facing hedge funds.
But there are several online reputation issues facing hedge funds and their founders. The most important include:
Privacy Threats
Inside leaks that impact their trades. Take Greenlight Capital’s legal move to force investment site Seeking Alpha to reveal the identity of an anonymous contributor last February. (S/he leaked information on a large purchase by the firm—23 million shares of Micron Technology). Greenlight’s experience is not unusual, but its willingness to take legal action is. Most hedge funds steer clear of this type of public statement. (The firm dropped the suit after independently identifying the blogger.)
A high level of unwanted online visibility. News about hedge fund managers’ personal lives, complete with photographs they didn’t create, populate the web and in some cases can damage their professional brand. Their personal addresses—and even satellite pictures of their homes—can be appear on a variety of websites. This information can originate from a source they considered safe (for instance, making a political donation that is subsequently published with a list of home addresses) but is then aggregated and republished.
Due to the lack of laws governing Internet content, this is legal, at least in the United States. According to Section 230 of the Communications Decency Act, the main law regulating Internet content, “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”
Parody Blogs and Twitter Accounts
Common online issues facing hedge funds include third parties that take up their name space (a URL, or website address, resembling a person or company’s name). This can involve blogs and twitter accounts that appear to post information in their name but are actually platforms through which anonymous users can parody (or perhaps praise) the person or company. Many hedge funds choose to ignore such sites. But when the sites take up residence near the top of search results – the first and second pages after a Google search of the company or founder’s name – they don’t just consume online real estate, they can also impact a brand.
Reviews
The private nature of hedge funds limits their involvement with investor reviews and comments, factors that are much more important in the greater financial services industry. But these can now come from a new and unexpected source: Google’s Places for Business. If you own a hedge fund and suddenly see a box in the upper right corner opposite your company’s website with your business’s name, a description, map of its location and an invitation for anyone to post a review of it there, you are looking at a relatively new aspect of Google+ local. This can serve as valuable marketing for businesses that rely on and benefit from reviews and walk-ins (such as restaurants, tailors and even some investment firms). But it is probably not an asset for hedge funds.
Keep an Eye on Your Brand Name…Lower Down on Google
Online reputation management firms maintain 24/7 monitoring of their clients online to keep track of new online content that appears about individuals and brands. But there is a quick way for hedge funds and their managers to glean insight into potential new privacy or reputation management issues: watch pages four through seven of the results in a Google search of your name and your organization’s name. New and unwanted content often first shows up on those lower pages before climbing higher. Depending on its source, relevance and quality, this content can take several weeks to rise—if it rises at all. That delay can provide an opportunity to develop an effective response.
Even hedge funds that have not had any reputation management issues would be well served to consider potential problems and develop a plan that addresses them. In the era of social media, that should also include social media and BYOD (“Bring Your Own Device”) policies for employees so you both know your rights.
Excerpts from this article were published in selected Hearst Media Services Connecticut newspapers on 6.7.14.