Institutional Investor's Alpha Magazine - September 2008 - (Page 25)

Interview Joel Press Press By Udayan Gupta Credentials HEDGE FUND ACCOUNTING PIONEER JOEL PRESS SAYS THE INDUSTRY HE HELPED NURTURE IS A LONG WAY FROM MATURITY . J oel Press fell in love with hedge funds in his ﬁrst job more than a generation ago at a Wall Street accounting ﬁrm called Oppenheimer, Appel, Dixon & Co. The year was 1968, and Press landed a small hedge fund client that was part of a then-tiny industry. Over two decades, Press, who came from modest beginnings (he has a bachelor’s degree in accounting from Long Island University), became a sought-after specialist in counseling hedge fund managers on the rules of the road: “I gave advice on how to work within the law.” He was an accountant-doctor of sorts, whom clients would call for a checkup whenever they began to wonder whether they had put their fund together properly. As it happened, the rules on hedging were still in ﬂux, so Press ended up helping to shape some of the budding industry’s standards on audits, due diligence and succession planning and in such arcana as how to merge one hedge fund with another and how to create and use side pockets (a mechanism that favors some investors over others by isolating certain assets from others). Today, Press is a senior adviser at investment bank Morgan Stanley, where he brings his considerable industry connections to bear, counseling some of the ﬁrm’s biggest hedge fund clients. He came to Morgan Stanley after retiring in 2006 from a long leadership stint at accounting ﬁrm Ernst & Young. “Joel’s unique experience advising hedge funds on all aspects of their business has made him an invaluable resource to our clients at the highest level,” says Stuart Hendel, global head of the ﬁrm’s prime brokerage business. “He really is the guru of the hedge fund industry and also one of its early students,” adds Arthur Tully, co-head of Ernst & Young’s hedge fund practice, who has known Press since 1981, almost a decade before the two worked together. “He founded the Ernst & Young practice and dealt with everyone and anyone who was a leading hedge fund. More important, his knowledge of the industry — especially in terms of when he began working in it — helped him deﬁne what are the best practices.” One of the doubts Press, now 62, had about joining Morgan Stanley was his age. “How does a 60-year-old ﬁt into a ﬁrm of lots of younger people? And an outsider, no less,” he recalls wondering just before he met with Richard Portogallo, who was then head of Morgan Stanley’s prime brokerage unit (he is now co-head of institutional clients and services) and one of several top investment bankers who were recruiting Press. Portogallo’s reply, as Press remembers it: “We’ll ﬁgure it out. Do whatever you want. Just be here for us. Introduce us to clients. Do whatever you did at Ernst & Young. Just do it here.” Press hasn’t always had so smooth a transition. In 1989, conﬁdent of his ability to operate independently, he left Oppenheimer to start his own fund-consulting business. It was a short-lived endeavor that ended when he realized he needed a bigger platform to deliver the services he wanted to offer. He saw his opening in the merger of Ernst & Whinny and Arthur Young & Co. that same year. “I told them I thought hedge funds would dominate the ﬁnancial services business.” During his 17 years at Ernst & Young, Press helped build the biggest hedge fund accounting practice in the world; it controlled 40 percent of the global market as recently as 2006, according to the ﬁrm, well ahead of its nearest competitor, PricewaterhouseCoopers, which Press estimates had about 35 percent of the market. More than 1,000 employees reported to Press, and his group was the SEPTEMBER 2008 • INSTITUTIONAL INVESTOR’S ALPHA • 25

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - September 2008

Institutional Investor's Alpha Magazine - September 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Culling the Herd The Good Guys: Ending the Cycle Interview: Press Credentials Cover Story: Rethinking Chris Hohn Strategies: At the Edge of the Earth Profile: Alpha Femals Strategies: Tails, You Lose Research Center: The Top Equity Trading Firms Alpha Bytes: The Light Is On Unhedged: Commentary: Not-So-Dire Diagnosis

Institutional Investor's Alpha Magazine - September 2008

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