Corgentum Consulting Quoted in Waters Technology Piece “Undue Diligence”
Corgentum Consulting has been featured in an article for Waters Technology entitled, “Undue Diligence”, written by Anthony Malakian. This article discusses the importance of operational due diligence. Malakian points out that when operational due diligence does not occur, situations like AIJ or the recent, entirely made-up fund, Market Neutral Trading can happen, causing investors to lose millions of dollars.
Mr. Scharfman is quoted in the piece explaining how Japan’s regulatory structure is a bit behind the United States and Europe.
“The Securities and Exchange Surveillance Commission (SESC) hasn’t accused AIJ of any wrongdoing, but that will change if it’s proven that AIJ hid funds overseas in the Cayman Islands. And it should be noted that Japan’s regulatory structure is only now catching up to those of the US and Europe.”
Mr. Scharfman also points out:
“Japanese investors, culturally, have been less inclined to put the screws to fund managers,” he says. “In other regions, post-Madoff, investors have realized that they have to look past any cultural hang-ups or not wanting to embarrass somebody or not be forward and ask certain questions. Japan has been behind the curve a little bit and they’re only now catching up.”
Furthermore, this article raises other due diligence issues pertaining to technology. Now, more than ever, investors are looking for specific documents from fund managers as a means to diving deep on the due diligence process. Mr. Scharfman was also quoted saying, “People are struggling with what to do with all the documents they receive when conducting due diligence and then how they analyze those documents. The solution will come down to how to organize and mine data that is generated in the due diligence process.” 
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Corgentum’s Managing Partner, Jason Scharfman Discusses Due Diligence Techniques for Success on TabbForum
Corgentum Consulting’s, Jason Scharfman’s article, “Due Diligence Techniques for Success: Why Fund Managers Try to Manipulate Due Diligence,“ was featured on TabbForum, a news and opinion hub for the financial industry.
In this article, Mr.Scharfman discusses the importance of transparency between fund managers and clients. He explains how in situations like the AIJ scandal, fund managers would not even allow investors to perform any type of due diligence and that this is a red flag for investors.
Investors who are new to the due diligence process are often hesitant to ask tough questions of the fund managers, however they should take control of the process. The main goal of due diligence is to avoid risk. By performing due diligence correctly, investors can insure that they are investing their capital with the right manager.
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Corgentum’s Managing Partner, Jason Scharfman Discusses the Importance of Operational Due Diligence with Bloomberg
Corgentum Consulting’s Managing Partner, Jason Scharfman, was recently quoted in a Bloomberg piece entitled,” AIJ Beckoned Japan Pensions With 50-Year-Old Return Targets.” This article was written by Tomoko Yamazaki and Komaki Ito. Mr. Scharfman discussed the role of operational due diligence in the developing AIJ scandal.
This recent AIJ story has pushed operational due diligence into the forefront of important trends for investors. Because of the AIJ crisis, operational due diligence is on the minds of allocators looking to invest in hedge funds, private equity funds as well as other traditional funds.
Mr. Scharfman stresses the importance of operational due diligence regardless of fund size, reputation or popularity. He was quoted in the article saying, “In the case of AIJ, underfunded Japanese pension funds seemed to have placed profits ahead of common sense.” He also commented on the crucial roles pension fund managers should play when it comes to overseeing assets. “The job of pension fund managers is to exercise due diligence and protect assets, not simply chase high returns.”
The full article is available on Bloomberg website or via direct link here. 
