Jason Scharfman, author of  Hedge Fund Operational Due Diligence, and Managing Partner at Corgentum Consulting, LLC., has released a new study of operational due diligence trends.

“We gathered data from over 200 hedge fund allocation organizations and noted trends in their due diligence processes. The paper also looks at the effects of fraud in guiding investor operational due diligence.” Scharfman said.

Key findings from the study include:

• Post-Madoff investor due diligence reviews of hedge fund cash management policies and controls has increased by almost 60%.

• The role of the board of directors of offshore funds is dangerously minimized with less than 2% of investors covering these items during due diligence

• In anticipation of stricter hedge fund regulation fund of hedge funds are focusing the bulk of their due diligence efforts on legal, compliance and regulatory risks

• A Madoff Effect has developed in hedge fund due diligence causing an increased investor focus on:

cash controls

quality and length of relationship with service providers

transparency and reporting

The study is available for download at: http://www.corgentum.com/research-madoffeffect.html

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