Whats the central objective of the due diligence process?
In essence it’s to try to hold investment managers to standards, responded Mr. Cohen. Typically, a due diligence team visits the fund manager’s office to meet with the CEO, COO, CFO, compliance and legal personnel, and technology department. Beforehand, the team may review prime brokerage agreements, administration agreements, business continuity plans, compliance manuals and regulatory filings and other documents. During the site visit interviews, the various staff members are asked to describe how the business operates. The level of detail is high because “with alternative funds your counterparty risk, as I think has been shown over the past year and a half, is significantly higher than with a large institution,” he said. In earlier days, some funds declined to make their managers available for lengthy interviews with prospective investors. “That has changed now with the environment. Many hedge funds have lost capital. Raising capital is a tremendous challenge. Redemptions are very h
