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Alternative Market Briefing

Operational due diligence takes centre stage

Tuesday, July 31, 2012

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Shane Brett
By Beverly Chandler, Opalesque London:

Post-Madoff, operational due diligence has become crucial, moving, according to Shane Brett, managing director of Global Perspectives, to centre stage within the alternatives industry. In his latest White Paper –The Rise & Rise of Operational Due Diligence, Brett recalls that the Madoff scandal exposed the alternative investment industry to widespread allegations of substantial neglect, in terms of its due diligence processes.

Brett’s paper asks what should a hedge fund investor or fund of fund manager look for and do to ensure a potential investment is being correctly managed. In an interview with Opalesque, Brett explained that issues still abound, despite the raft of new regulation that has been drafted or implemented since the financial crises of the last few years.

"The new regulation is only in early stages and especially on the European side we are nearly there with a September deadline for the final draft of the AIFMD, but it will take a couple of years to get embedded" Brett says. "Operational due diligence will be a very important part of investing in hedge funds going forward."

Crucial for Brett is the 'know your customer’ tenet, even in a heavily regulated UCITS fund. At investment manager level, he focuses on the protocol of movement of cash around a fund. "In one memorable instance the Founder & Manager of......................

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