December 19, 2013
Corgentum Sends It's 2000th Tweet!
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November 12, 2013
Corgentum Discusses Self-Administration of Credit Products with COO Connect from GAIMOPs Paris
At the recent GAIMOPs International conference in Paris, Corgentum Consulting commented on a number of trends in operational risk. In particular, Corgentum Consulting Managing Partner Jason Scharfman led sessions on the ODD challenges presented in analyzing financial statements as well as the new Swiss regulatory framework for alternatives.
As can be expected, the subject of valuation and the related oversight role of administrators were also discussed. Commenting on this topic with COO Connect at the conference, Mr. Scharfman said in part, "...a growing number are investing in illiquid, credit products. This means more managers are having to do more self-administration. While there is no limit per say on how much managers can self-administer, it could concern some of the more operationally conservative investors.” Mr. Scharfman's comments were covered in an article entitled, Growth in esoteric instruments leading to more self-administration.
"Different investors tolerate different percentages of self-administration. Some investors will say if 1% or 0.5% of assets are manager marked, then that constitutes self-administration, while others will have higher thresholds,” Scharfman went on to say. The full article can be read on the COO Connect website.
November 6, 2013
Corgentum Selected As Operational Due Diligence and Background Investigation Provider for FNEX Alternatives Platform
Corgentum Consulting announced today that it has been selected as the operational due diligence and background investigation provider to the FNEX.com alternatives marketplace. FNEX, which launched last month, is a web-based platform that provides accredited investors, family offices and institutions access to investment opportunities offered by investment banks and funds across the US.
Todd Ryden, Chief Executive Officer of FNEX, said: “ We recognize that due diligence is one of the most important processes that investors should undertake as they consider investing capital in any fund. In addition to providing accredited investors, family offices and institutions with an easy-to-use online resource to identify, review and invest in alternative investments, the FNEX.com platform also enables investors to educate themselves on various opportunities, compare and contrast offerings and enhance their ability to make informed investment decisions. By teaming with Corgentum Consulting we are providing our valued users with more choices as well as direct and immediate access to the industry’s leading operational due diligence review services for evaluating funds. We are confident that users will respond quite favorably to this new partnership.”
Jason Scharfman , Managing Partner of Corgentum, said, " Investors of all sizes are increasingly embracing the benefits of deep dive comprehensive operational due diligence reviews. Coupled with our comprehensive background investigations, Corgentum is excited to be able to partner with FNEX, to offer users access to institutional level operational risk reviews of fund managers. By having access to our multi-disciplinary operational due diligence solutions investors will benefit from analysis that goes beyond simply traditional fund back office operations analysis into areas including compliance, valuation and service provider reviews. This new partnership will benefit FNEX users by providing them with a full array of options for investment reviews and customized, robust operational due diligence. "
Coverage of this announcement can be found in media outlets including HedgeWeek .
To learn more about Corgentum's deep dive operational due diligence review and background investigation services for investors, please contact us via our website.
November 5, 2013
Corgentum's Scharfman Comments on the Operational Due Diligence Hiring Gap in the Hedge Fund Journal
Operational due diligence is increasingly a mutli-disciplinary exercise in nature. Yet due its roots in fund accounting and back office procedures, ODD teams have traditionally been staffed by individuals with heavy fund accounting and back office backgrounds.
Addressing this disconnect Corgentum Consulting Managing Partner Jason Scharfman has written on op-ed for The Hedge Fund Journal. In the article, entitled Personnel Failure - Operational Due Diligence Hiring Gap Is Hurting the Industry , Mr. Scharfman writes in part: " ...despite the increasingly multi-disciplinary nature of items covered during operational due diligence reviews, institutional investors attitudes towards the types of individuals they hire to staff operational due diligence functions is largely stuck in historical notions that operational due diligence is still primarily focused on traditional fund accounting and operations. By not developing operational due diligence teams staffed by individuals from truly different disciplines, investors are missing a key part of the overall operational risk picture of the hedge funds they review. "
The full article is available in this month's issue of The Hedge Fund Journal or via direct link on their website (subscription required).
October 28, 2013
GAIMOps International Conference - Corgentum to Moderate Sessions On Financial Statement Analysis and New Swiss Regulation in Paris
The Swiss Collective Investment Schemes ActMany investors, and large institutions in particular, invest in hedge fund all over the globe, Adopting, for example, a US centric approach to operational due diligence may therefore, not be entirely appropriate when considering a potential allocation to a hedge fund manager in Singapore or London. Further potentially complicating the issue is when hedge fund managers maintain offices in multiple jurisdictions such as the US and the UK. Part of understanding the intricacies of different jurisdictions that will allow investors and operational due diligence professionals to tailor their approach, involves understanding regional regulations and laws. An example of such a new law is the Swiss Collective Investment Schemes Act. Mr. Scharfman will host a panel discussion to provide background on this law and its implications for hedge funds. Other topics anticipated to be discussed include:
- Understanding the CISA revisions under a AIFMD context
- Are the revised CISA regulations good for the industry?
- Determining what fund structures are acceptable under the new regulations
- Lessons for other regulatory regimes from the Swiss revision experience
Roadmap for Analyzing the Audited Financial StatementsInvestors and operational due diligence professionals alike are increasingly acknowledging the multi-disciplinary nature of operational due diligence. One traditional component of these reviews has been a review of the financial statements. While such analysis is only one piece of a larger due diligence puzzle, this does not mean that financial statement analysis should by any means be taken for granted. To address key trends and issues with regards to financial statement analysis, Mr. Scharfman will moderate a panel entitled, Roadmap for Analyzing the Audited Financial Statements. Key topics anticipated to be covered include:
- Trends in financial statement analysis — the GAAP vs. IFRS challenge
- Are FAS 157 hierarchies still relevant?
- Can any sort of forensic analysis really be performed on audited financials?
- Understanding fund expenses
- Incorporating audited financial analysis into a broader operational due diligence review
To learn more about any of these sessions, and to join Corgentum at the conference please signup at the GAIMOPs International website. We look forward to seeing you at the event!
October 17, 2013
Attend NYC Class Taught by Corgentum's Scharfman - "Surviving a Hedge Fund Operational Due Diligence Audit"
Operational due diligence is now a fairly standard part of hedge fund investors larger due diligence process, or at least it should be. As investors continue to accept the benefits of conducting deep dive operational due diligence reviews of hedge fund managers, these managers have continued to devote more time and effort to responding to investor data requests and navigating the overall process.
In order to hedge funds with perspective on how to more effectively navigate this process, Corgentum Consulting Managing Partner Jason Scharfman will be teaching a class geared towards senior hedge fund management professionals who are involved in the operational due diligence process. Specifically, the class Surviving a Hedge Fund Operational Due Diligence Audit, is targeted for senior hedge fund professionals including COOs, CFOs, CTOs, CCOs, GCs, portfolio managers, compliance staff, fund accounting, operations managers and marketing personnel.
In advance of the course, Mr. Scharfman has written a guest blog post on FTF's blog, The Bull Run. The blog post entitled, Strategy Specific Hedge Fund Operational Due Diligence, focuses on the benefits and challenges presented to investors in tailoring their operational due diligence approaches to the different hedge fund strategies. The post can be found at this link.
To learn more about the course or to register please visit the course homepage.
September 16, 2013
Corgentum to Outline Operational Due Diligence Trends at Upcoming Vancouver and Boston Opal Conferences
The process of operational due diligence is not stuck at a fixed point in time but rather, is constantly evolving in scope and depth. This evolution comes in part based on changing investor attitudes, developing market best practices, and in response to regulatory changes. Corgentum Consulting Managing Partner Jason Scharfman will be speaking at two upcoming Opal conferences to address the challenges recent operational due diligence trends pose to different investor groups,
At the first conference he will address the increasing complex operational due diligence environment faced by family offices at the Canadian Family Office & Private Wealth Management Forum West. The panel will be entitled, Hedge Fund Trends for 2014 and Beyond and will take place on Thursday September 26, 2013 at the Renaissance Vancouver Harbourside Hotel, Vancouver, British Columbia, Canada.
At the next event, the Endowment & Foundation Forum , Mr. Scharfman will address an increasing trend of Endowment and Foundations recognizing the conflicts presented in having traditional investment consultants perform operational due diligence , as well as the opportunities presented by utilizing specialized operational due diligence consultants such as Corgentum. The panel at this event will be titled, Hedge Fund Opportunities - The Alternatives Challenge for Endowments and Foundations and will take place on Tuesday October 8, 2013 at the Boston Marriott Long Wharf, Boston, MA.
To signup to attend these panel please visit the respective conferences websites in the links above. We look forward to seeing you at these events!
August 14, 2013
Corgentum Releases August 2013 Edition of Operational Due Diligence Insights
Corgentum Consulting has released the August 2013 edition of its quarterly newsletter Operational Due Diligence Insights.
Some key highlights of this issue include articles on the following subjects:
- Regulatory Focus - Too Little Too Late: Taking Stock of the SEC's Presence Exam Program
- Accounting Spotlight: Focus on Related Party Transactions
- Business Continuity Corner: Do Hedge Funds Need Pandemic Plans?
- Private Equity: PE Real Estate Fund Evaluation - Are You Tailoring Your Approach?
To subscribe to be notified of future issues of Operational Due Diligence Insights please signup for our mailing list at our contact page.
June 26, 2013
Corgentum to Moderate Private Equity Panel at Family Office Forum
Private equity operational due diligence continues to be a pressing concern for LPs. A recent Corgentum study has shown that family offices have recently refocused on operational due diligence.
Family offices have also begun to expand their operational due diligence to not only hedge funds but to private equity as well. In order to comment on this trend, Corgentum Consulting Managing Partner Jason Scharfman will be moderating the Family Office & Private Wealth Management Forum in Newport, Rhode Island. The session will take place on Thursday July 23, 2013 beginning at 9am.
At the session, Mr. Scharfman is anticipated to discuss a number of topics related to operational due diligence on this panel including:
- Techniques for performing operational due diligence in private equity and venture funds
- The ways in which family offices benefit from working with operational due diligence consultants
- What family offices need to know about operational due diligence on private equity funds
The panel will also likely cover several topics included in Scharfman’s upcoming book, Private Equity Operational Due Diligence: Tools for Evaluating Liquidity, Valuation and Documentation.
To sign up for the conference, click here
May 22, 2013
Corgentum Outlines Family Office Operational Due Diligence Trends with Financial Advisor Magazine's Private Wealth
With the rise in interest in operational due diligence over the past few years, there has been anecdotal evidence that different investor groups have approached the subject differently. While certain institutional investors were early adopters of operational risk reviews of fund managers, there was a sense in the marketplace that certain groups such as family offices have been late adopters of comprehensive operational due diligence processes. To gauge these trends Corgentum conducted a survey of over 120 family office professionals in the U.S., Europe and Asia.
Key findings from the survey include:
- Almost one fourth of those family offices surveyed (24%) indicated that they, or their consultants, do not perform any operational due diligence
- The majority of family offices (73%) indicated that they do not feel confident that they, or their consultants, have the capabilities to perform effective operational due diligence.
- 82% percent of those surveyed indicated that they were not performing what they deemed to be operational due diligence two years ago
- Only 21% of family offices maintain a documented operational due diligence process
- The majority of family offices (68 %) feel that their operational due diligence processes do not adhere to minimum standards.
- Family offices are still overwhelmingly concerned with fraud. 57% of them stated that it was the largest operational risk facing investors. Other risks considered to be important were regulatory risks (21%) and counterparty risks (9%)
You can read about coverage of the survey in Financial Advisor Magazine's Private Wealth in an article titled, Family Offices Play Catch-Up On Hedge Fund Due Diligence . Commenting on the study to Private Wealth Corgentum Consulting Managing Partner Jason Scharfman stated, “ Several years ago, this [operational due diligence] was not really on the radar of family offices. They are increasingly worries about not only fraud but about operational gray areas—activities that fall between outright fraud and bad controls. "
The full article is available on the Private Wealth website. The survey was also covered by COO Connect in an article entitled, Family office operational due diligence found wanting, warns consultant. Additionally the full Corgentum white paper titled, Family Office Study: Taking Aim At Hedge Fund Operational Risk is available in the Research section of the Corgentum.com website, or via direct link here.
April 4, 2013
Corgentum's Scharfman Discuss Private Equity LP Concerns With the Wall St. Journal: Valuation, Insider Trading and Fraud
Limited Partners ("LPs") are increasingly focused on managing operational risks in their private equity investments. Corgentum Consulting Managing Partner Jason Scharfman recently sat down with the Wall St. Journal's Private Equity Beat to discuss the state of LP operational due diligence and key concerns that top LP's have regarding their private equity investments.
The article, "Valuation, Insider Trading and Fraud Top LP Concerns Over PE Funds," outlines how Limited Partners are increasingly relying on firms such as Corgentum to assist with their increasingly aggressive with their private equity due diligence efforts.
Commenting on this trends Mr. Scharfman states, “Investigations have gotten a lot more detailed and comprehensive. More LPs are saying we need to integrate that more into the overall due diligence process.” The increased focus on operational due diligence in particular highlights many of the trends outlined in Mr. Scharfman's book Private Equity Operational Due Diligence: Tools to Evaluate Liquidity, Valuation and Documentation
In the article, Mr. Scharfman also comments on the increasing insider trading risks facing many private equity General Partners and the related concerns of their LP saying, “ Now there’s a double whammy because the government is becoming more aggressive at pursuing insider trading and the firms are being forced to follow more stringent SEC requirements, when they previously didn’t have to follow any. It’s almost like a perfect storm scenario. ”
The full article can be read on the Wall Street Journal website.
March 14, 2013
Hedge Fund Review Discusses Corgentum ODD Analyst Survey Findings - Hedge Funds Fall Short On Compliance
The scope of operational due diligence (ODD) continues to evolve. This evolution is driven in part based on the rapidly changing landscape of regulatory developments across the globe.
To gauge trends in operational due diligence, Corgentum recently surveyed operational due diligence analysts including those that attended the firm's inaugural operational due diligence breakfast briefing which took place in February at the Harvard Club in New York City.
These survey results were recently covered in Hedge Fund Review magazine in an article titled, Hedge Funds Fall Short on Compliance. The article outlines that the survey results showed that 76% of ODD analysts, stated they most often find problems related to compliance and regulatory issues at hedge funds. This was as compared to 11% of those ODD analysts surveyed which stated that fund accounting and financial statement reviews raised the most problems. A smaller number said they most commonly found failures related to legal issues (8%) and business continuity (5%).
Other key findings from the survey included:
- As the scope of ODD reviews has increased, over 70% of ODD analysts feel they are increasingly understaffed to meet demands
- ODD analysts feel the biggest regulatory operational challenges to hedge funds will come from AIFMD (59%) and SEC registration (23%) while they are less concerned with electronic/central clearing of OTC derivative (12%) and FATCA (6%)
- For 2013 ODD reviews will focus most heavily on compliance / regulatory issues (58%) and fund accounting practices (26%)
March 11, 2013
Corgentum Launches Background Investigation Service To Provide Clients With the Industry's First Fully Integrated Operational Due Diligence Model
Corgentum Consulting recently announced the launch of a new background investigation service, expanding the firm's industry leading operational due diligence offerings.
Corgentum's investigative reviews will cover a comprehensive list of key background and reputational risks across five core areas, including criminal checks, litigation searches, regulatory inquiries, factual information and media searches. This new offering establishes Corgentum as the first independent US based operational due diligence provider to offer a truly comprehensive operational due diligence model for investors.
In a press release announcing the launch of the new services Corgentum Managing Partner Jason Scharfman stated, " Traditionally, consultants have outsourced the background investigation process to stand-alone investigative firms or subcontractors, which incorporated a new risk for investors with regards to the quality and consistency of the work. By performing our own comprehensive background investigations in-house, Corgentum is the first ODD consultant to offer investors a true, full-service solution. Our investor focused reviews not only provide investigative data, but also actionable guidance as we assess and rate the risks to investors. ”
Corgentum's full service approach towards operational due diligence offers investors a more comprehensive operational due diligence solution. This integrated model has many advantages over the traditional model of segregating the background investigation and operational due diligence reviews. The benefits of this integrated model were recently covered by the publication, Wall St. Letter
Corgentum's approach to background research is a bottom-up, comprehensive data driven process. The background reviews are focused on providing investors with actionable fund manager recommendations to help them make better informed investment decisions. To summarize these advantages Corgentum has recently published a white paper about the benefits of Corgentum's integrated operational due diligence and background investigation model.
To learn more about Corgentum's operational due diligence and background investigation services, we invite you to contact us today.
February 25, 2013
Corgentum's Operational Due Diligence Breakfast Briefing Highlights Industry Trends
Last week operational due diligence professionals and investors gathered at the Harvard Club in New York City for Corgentum's inagural operational due diligence breakfast briefing. The event featured networking and a panel discussion about the latest trends in operational due diligence.
Opalesque recently covered the event's discussion of trends in operational due diligence including the recent effect of Hurricane Sandy on hedge fund buinsess continuity planning in an article entitled, Investors, researchers call for better disaster planning, operational due diligence .
The article also highlights the panelists general consensus that, "the cost of due diligence from the investor side will likely increase as they press funds for more transparency and new types of information."
The full article is available on the Opalesque website. .
February 20, 2013
Corgentum Discusses the Heinz Insider Trading Case with Yahoo! Finance
Insider trading continues to pose a very real operational risk to all investors, including those that invest in hedge funds and private equity. Corgentum Consulting Managing Partner Jason Scharfman recently spoke to Yahoo! Finance's Daily Ticker to discuss insider trading, the SEC and the recent Heinz options trading inquiry.
In the interview, Mr. Scharfman outlines the strong message the SEC is attempting to send by aggressively pursuing the unknown traders who allegedly utilized insider information to profit on options trades in H.J. Heinz Co. Specifically, one day before the announcement that Heinz was going to be taken over by Warren Buffett’s Berkshire Hathaway and 3G Capital, an unusually large order for 2,533 call options were purchased from a Swiss account at Goldman Sachs. The next day, after the announcement of the merger, the $90,000 initial trade was worth $1.8 million. The SEC has since had the accounts assets frozen.
Referring to the role of the SEC in this case, Mr. Scharfman says, " It wants people to know that insider trading is being watched, they’re prosecuting it, they’re monitoring the data and ultimately the trader is not going to reap those profits. "
Other topics covered by Mr. Scharfman in the interview include:
- The increased use of criminal prosecutions in insider trading cases
- Common defense tactics used in insider trading trials
- Steps investors can take to insulate themselves from insider trading
The full interview is available on the Yahoo! Finance website.
February 7, 2013
Corgentum Discusses the Effect of the New Head of the SEC on the Hedge Fund Industry with HFMWeek
In case you haven't heard the US Securities and Exchange Commission has a new leader, Mary Jo White.
There has been much speculation about what impact Ms. White will have on the hedge fund industry and investors. Commenting on this matter, Corgentum Consulting Managing Partner Jason Scharfman has written an op-ed for HFMWeek entitled, Hedge Funds Will Settle for the SEC's New Head.In the article, Mr. Scharfman raises the question of whether Ms. White's background as a prosecutor should have hedge fund managers scared that the SEC will pursue aggressive litigation against hedge funds. He also outlines the inability of investors to rely on the SEC to perform due diligence on their behalf and the continued pressures the SEC places on funds to settle as opposed to making them admit wrongdoing.
The full article is available on the HFMWeek website (subscription required).
February 4, 2013
Corgentum to Moderate Investing in Alternatives Panel at Investment Education Symposium
As we are well into 2013 investors with allocations to alternatives, including hedge funds and private equity, continue to face a series of increasingly broad and complex operational risks to evaluate. Corgentum Consulting Managing Partner Jason Scharfman will address these investor operational risk challenges as he moderates the Investing in Alternatives panel at the upcoming Investment Education Symposium in New Orleans, LA.
As this conference is taking place in Louisiana, Mr. Scharfman is expected to address many of the red flags present in the Fletcher case. He is also expected to address the ways in which endowments, foundations and pension systems, including those that may have had exposure in the Fletcher case, can work with an operational due diligence consultants, such as Corgentum to compliment any existing traditional investment consulting relationships and augment their operational due diligence functions.The panel will take place on February 7, 2013 at 2:00pm. To join Corgentum at the panel please visit the conference website.
January 14, 2013
Corgentum to Host Operational Due Diligence Breakfast Briefing in New York City on February 19, 2013
Corgentum Consulting has announced that it is holding an Operational Due Diligence Breakfast Briefing at the Harvard Club in New York City on Tuesday February 19, 2013 from 8am to 10am. The event will feature networking and a panel discussion about the latest trends in operational due diligence.
The speakers for the panel discussion will be:
- Louis Rodriguez - Head of Operational Due Diligence at Arden Asset Management
- Professor Stephen Brown - David S. Loeb Professor of Finance at New York University
- Adam Cohen - Head of the Operational Due Diligence within the Alternative Investments Group at Morgan Stanley Smith Barney
- David Gold - Head of Operational Due Diligence, Americas at Towers Watson
- Jason Scharfman (Moderator) - Managing Partner at Corgentum Consulting
This session is only open to operational due diligence professionals and investors.
Space at this complementary event is limited.
If you are interested in attending please RSVP via email to: Events@Corgentum.com