Due Diligence in a Post-Madoff World: Trust but Verify
Rick Cortese, NRS; Karen Aavik, M&T Bank
Thursday, October 15, 2009 1:00 p.m. – 3:00 p.m. (ET)

Course Description:

One of the many lessons taught by the Madoff scandal is that due diligence cannot be based on reputation alone and that “red flags” are ignored at one’s peril. The term due diligence is frequently employed in the context of fund-of-funds managers or institutional/pension investors which invest in hedge funds and undertake reviews to collect and monitor information regarding a hedge fund’s operational and compliance infrastructure. However, the need to perform reasonable and adequate due diligence reviews also falls upon investment advisers with respect to third-party service providers such as solicitors and sub-advisers. The SEC has been telegraphing greater scrutiny of firms that hold themselves out as performing these services and SEC examiners will be ratcheting up oversight in this area. The lessons of the litigation now engulfing the Madoff feeder funds should not be lost on compliance officers and risk managers.

Topics to be covered:

This program provides an overview of the elements of a defensible due diligence review process. Topics include:

• Drill-down due diligence vs. checklist due diligence

• Effective on-site visits and the questions you need to ask

• Operational, risk management and compliance reviews

• Assessing firm management and organization

• Background checks

• Risk assessments for hedge funds and traditional outside managers or sub-advisers

• Due diligence procedures to detect potential fraud

• Ongoing due diligence

Learning objectives

1. Become familiar with basic elements of an adequate and defensible due diligence process with emphasis on risk management and compliance reviews

2. Develop operational strategies to ensure that your firm’s due diligence efforts are consistent with representations to clients and will withstand SEC scrutiny

3. Learn from a live, instructor-led discussion of current issues to further your understanding of due diligence issues in an unsettled financial environment

4. Receive practical tips and recommendations to enhance your due diligence process

For whom:

Designed to enhance risk management and the professional competency of advisory professionals with legal, compliance and management responsibilities, this online course provides convenient, time-effective training for professionals from both SEC and state-registered firms - those newer to the field as well as experienced practitioners. This course is designed to meet continuing education requirements for accountants, attorneys, certified financial planners, and Investment Adviser Certified Compliance Professionals.
 

Scope/purpose

This intermediate-to-advanced level course of study, comparable to an upper-division baccalaureate level, examines regulatory developments and requirements for investment advisory compliance professionals with the goal of enhancing their professional competence. The pre-requisite for participation is a basic understanding of definitions and concepts arising under securities law.