Allocators to private funds are exposed to a variety of operational risks including regulatory and compliance risks, counterparty risks, systems and technology risks, portfolio valuation risks, cybersecurity risks, BCP and continuity planning risks. The list of risks is very long and is the primary focus of the people that undertake operational due diligence reviews of funds and fund managers. Perhaps the most critical risks are associated with cash controls and the prevention of theft and malfeasance. Both have occurred repeatedly throughout the industry, and are very highly correlated with a manager having poor cash controls. One of the ways to identify potential issues is to evaluate the managers' cash controls during the due diligence process. IMDDA Advisory Board Member John Ward was put together an interesting and timely white paper on operational due diligence and the evaluation of Cash Controls. To read the white paper as well as learn more about our upcoming programs please click here.Read More
The news of the college bribe scandal has rocked the United States from Hollywood to Main Street. The issue at hand for investors is to scrub the list and check for names of people that may work at funds. We saw a couple of names that we recognized! This scandal reminds us that due diligence is constant.Read More
Due diligence professionals need to fully understand the role of a fund administrator because they need to be able to properly question the processes and activities of that fund administrator when assessing an investment opportunity. The role of a third party fund administrator can vary widely from one fund to another and so it’s definitely not a case of one size fits all or one rule works for every occasion.