Radical Transparency Means Never Trusting What Your Administrator Says

Bridgewater hires an evaluator for its evaluator because Bridgewater does not f@$% around, you guys.
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Ray Dalio (Getty Images)

Five years ago, Bridgewater Associates did something strange for a firm that videotapes all of its meetings for other firm members to peruse for violations of the Tao of Dalio: It outsourced everything that wasn’t managing money to the Bank of New York Mellon, which presumably does not have closed-circuit cameras beaming every discussion of last night’s game or inquiry after a child back to Westport.

This means, in part, that it has to rely on BNY Mellon’s valuations, which would seem to be a violation of Principle #99: “Don’t assume that people’s answers are correct.” And so Bridgewater co-CEO and well-known liar Eileen Murray paged down to Principle #140, which advises to “have as many eyes looking for potential problems as possible.” So she did what many hedge funds can’t afford to do (but now probably will have to): She hired someone else to check BNY Mellon’s math.

Bridgewater hired Northern Trust Corp. in 2013 to shadow BNY Mellon, using the same information to perform its own independent processing, including reconciliation and valuation.

Having two independent evaluators gives Bridgewater a strong measure of confidence in the valuation of its portfolio holdings, Ms. Murray said….

The valuation process requires that BNY Mellon and Northern Trust staff review and reconcile valuations with each other intraday, monitored by a Bridgewater quality-control team, Ms. Murray said.

Bridgewater making waves with dual-party valuation [Pensions & Investments]

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