Focus on Operational Risk and Due Diligence: Corgentum Discusses Operational Risk with HFMWeek
A new article this week in HFMWeek focuses on operational risk and operational due diligence in hedge funds. Corgentum Consulting Managing Partner, Jason Scharfman is featured this week in the article.
In the article, which is entitled “Focus on Operational Risk” Mr. Scharfman discusses the enhanced focus which investors and hedge funds have placed on operational risk management and operational due diligence in the aftermath of the financial crisis.
Mr. Scharfman also cites Corgentum’s proprietary research which demonstrates an increasing trend that managers with weaker operational infrastructures demonstrate lower performance as opposed to those with stronger operations. Other key operational risk considerations outlined by Mr. Scharfman in the article include:
- The presence of conflicts of interest related to providing operational due diligence services to both hedge funds and investors
- The dangers of over reliance on hedge fund regulation to supplant investor’s own due diligence efforts
- Ways in which investors can benefit from having an independent third party consultant such as Corgentum assisting with operational due diligence reviews
- The benefits to a hedge fund’s operations of proper internal resource allocation and management oversight
The article can be found in print editions of HFMWeek at HFMWeek.com, or via direct link.
Corgentum Releases Guide To Understanding Your Hedge Fund’s Approach to Prime Brokerage
Corgentum Consulting has released a new guide providing an overview to hedge fund’s approaches to prime brokerage. This paper provides an overview of the operational risk and challenges which prime brokerage presents hedge funds.
Understanding Your Hedge Fund’s Approach To Prime Brokerage also discusses investor operational due diligence considerations for utilizing multiple prime brokers, the role of introducting prime brokers and bundled prime brokerage services.
The paper can be found in the Research section of the corgentum.com website, or via direct link here.
Madoff Speaks, Allen Stanford Returns, Secondary Market for Madoff Claims and Hedge Funds Sweep for Bugs
It is being reported that Allen Stanford, is being transferred to join Bernie Madoff at the Butner Federal Correction Complex in North Carolina to undergo drug treatment:
It is also being reported that Madoff claims that many of the large banks and fund of hedge funds who invested with him were “wilfully blind” and “chose to ignore con.” Here is a video about it:
It also seems a secondary market has developed for betting on how successful Irving Picard will be in recovering Madoff claims…
Finally, the Financial Times is reporting that motivated by continued paranoia (is it paranoia if the government really is out to get hedge funds?…) surrounding government oversight of insider trading hedge funds have begun to hire security firms to perform sweeps their offices and homes for electronic bugs (aka: listening devices). Here’s a video about some of the technology used in these sweeps including hidden camera detectors, fiber optic cameras, spectrum analyzers, and non-linear junction detectors:
So what happens when they find one? Maybe it would be like when a man named Yasir Afifi found an FBI tracking device on his car and asked the Internet community to tell him if he was being spied upon. Perhaps hedge funds familiar with reverse engineering strategies could similarly reverse engineer the technology and begin spying on the government – or would that be considered insider trading….?
