The study, ‘The Madoff Effect – An Analysis of Operational Due Diligence Trends’, is available for download at www.Corgentum.com or directly here.

For this study Corgentum collected data from over 200 global hedge fund allocation organizations including fund of hedge funds, endowments, foundations, corporate pensions, family offices, large independent financial advisory practices, ultra high net worth investors and private banking organizations. “The data shows that frauds such as Madoff are an important, but potentially misleading guiding light around which investors tend to focus their due diligence on hedge funds” said Jason Scharfman, Managing Partner.

Investors, influenced by recent hedge fund failures, have refocused their due diligence efforts on operational risk areas where leading operational red flags were present. In particular, since the Madoff scandal broke, this study shows that the number of fund of hedge funds reviewing hedge funds cash management policies and controls increased by almost 60%.  Other operational risk areas covered in the Corgentum study that have realized double-digit increases in attention from investors include transparency in reporting and the role of service providers such as auditors and administrators.

Corgentum’s analysis also demonstrates that certain operational risk areas continue to be dangerously neglected during the investor due diligence process. Less than 2% of the fund of hedge funds included in this study considered the independence of a hedge fund’s board of directors during the due diligence process. Other frequently overlooked operational risk areas included information technology infrastructure, personnel turnover and the quality of overall operations management.

“Investor’s must not only understand historical red flags, but be prepared to anticipate new ones. By incorporating proprietary benchmark studies of hedge fund fraud and models of operational inefficiency into our evolving operational due diligence process, Corgentum’s approach ensures investors keep up with the changing nature of hedge fund operational risk” said Scharfman. “Corgentum will continue to partner with fund of hedge funds, pensions, family offices and other investors to create tailored comprehensive hedge fund operational due diligence and ensure that their operational due diligence reviews are not misguided by fraud.”

Opalesque, published an article regarding the study . The article is entitled, “Madoff Effect continues to see investors focus more on fraud risk than operational risk” and is available at www.Opalesque.com or via direct link here (subscription required). Additionally, the press release regarding this study is available  here. HedgeCo.Net and HedgeWeek also covered the study in this post.

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Corgentum – Working with Investors to Evaluate and Monitor Operational Drag® in Hedge Funds

The paper is available for download in the research section of  www.Corgentum.com or here.

Hedge Fund Operational Due Diligence: Operational Drag

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This paper provides an overview of the importance of independence and objectivity in the Corgentum hedge fund operational due diligence process. This paper also outlines the benefits of Corgentum’s sole focus on operational due diligence as well as the benefits of Corgentum’s multidisciplinary approach.

The paper is available in the Research section of www.Corgentum.com or via direct link here.

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This paper provides a discussion of the importance of audited financial statement reviews as part of the broader hedge fund operational due diligence process. Additionally, this paper provides a list of key questions investors may want to consider when reviewing audited financial statements.

The paper can be found in the Research section of the www.corgentum.com website, or via direct link here .

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Corgentum Consulting has released a new research paper which provides an overview of the role due diligence questionnaires (“DDQ’s”) and request for proposals (“RFP’s”) play in the hedge fund operational due diligence process. This paper also outlines some key questions and other considerations investors should bear in mind before asking a manager to complete a customized due diligence questionnaire.

The paper entitled, Hedge Fund Operatinal Due Diligence Questionnaire – To Use or Not To Use? can be found in the Research section of the www.corgentum.com website, or via direct link here .

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This paper outlines, the benefits to investors of developing and maintaining competency of global operational risk trends. While an absolute best practice standard facilitates uniformity in comparing operational risk information, this methodology can suffer from rigidity.

A floating standard can better accommodate the particularities of hedge funds operating in different regions but runs the risk of being overly flexible.

Hedge Fund Operatinal Due Diligence: An Absolute or Floating Standard? can be found in the Research section of the www.corgentum.com website, or via direct link here .

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This paper discusses the often overlooked nature and importance of incorporating a review of a hedge fund’s information technology infrastructure into the investor operational due diligence process. Specifically, the information technology topics discussed in this piece include a review of a hedge fund’s hardware, software, business continuity and disaster recovery and information security.

This paper can be found in the Research section of the www.Corgentum.com website, or via direct link here.

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SEC’s complaint

The clip is available here:

The segment can also be viewed on the Fox Business News Website.

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For more information or to enroll in this course please visit the course details homepage.

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This paper discusses several key questions investors can utilize to evaluate their hedge fund’s administrator. Other topics addressed in this paper include the importance of understanding the nature of the administration services being provided, the need to monitor the on-going relationship between the hedge fund and the administrator and the diagnostic process concerning the role played by the administrator in the overall valuation process.

This paper can be found in the Research section of the www.corgentum.com website, or via direct link here .

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