This analysis was provided by Zurich-based due diligence service provider SwissAnalytics Ltd.
Regulatory Complaints are informative, but often too late
- Regulatory complaints can usually only serve as an inspection after the "house has already been burnt to the
ground" rather than a timely fire detector or an effective firefighter. This caused the SEC to look into its own
proceedings, e.g. in the Madoff case as well as in the Westridge case.
Regulatory complaints’ inability to timely prevent damage is caused by:
- Limited resources versus the large universe of managers and strategies
- Limited specialization and expertise for detailed understanding of the underlying operations
- Predominantly legal backgrounds of examiners and enforcement staff
- Lack of verification of information provided by investment managers as well as insufficient follow up on hints
and red flags.
This means that: