--Comprehensive Treatise is the 'Bible' for Assessing Essential Non-Investment Risks and Mandatory Reading for Investors and Hedge Funds
APRIL 2, 2009
Jason Scharfman, Managing Partner of operational due diligence consultancy Corgentum and former senior team member at Morgan Stanley's Graystone Research, has recently authored Hedge Fund Operational Due Diligence: Understanding the Risks, John Wiley & Sons, Inc. 300pp.
Corgentum has been thrust into the spotlight because of recent market turmoil caused by the financial crisis and the resulting impact on hedge funds and those who invest in them. "Operational risk--the loss resulting from inadequate or failed internal processes--is clearly in the forefront, most notably in the Madoff scandal," said Mr. Scharfman. "I wanted to write the book to help investors and hedge funds lessen the chance that anything like that should ever happen to them."
In the book's ten chapters, Scharfman identifies the operational risks inherent in running a hedge fund and provides a detailed guide to an operational due diligence program to diagnose, analyze and mitigate potential risks. He also examines modeling techniques for operational risk and discusses how to consider asset allocation based upon this important factor.
Scharfman defines a four-pronged approach necessary to conduct an effective hedge fund operational risk analysis which takes into account both internal and external risk factors. He also expounds upon five core themes in an operational risk analysis by which investors can significantly reduce any exposure they may have to fraud such as Ponzi schemes, and provides in-depth examples of situations in which operational risk should have been uncovered.
In later chapters Scharfman reviews the skills investors need to evaluate the background and reputation of a hedge fund, effective analysis techniques, and the necessity of conducting ongoing reviews. He also portrays possible scenarios presented to investors who conduct operational due diligence reviews.
The book's last chapter discusses the various quantitative approaches to modeling operational risk and provides a detailed review of the advantages and disadvantages of utilizing these models. Scharfman concludes by writing on the various trends facing the hedge fund industry including the impact of FAS157 and further regulation.
About Corgentum, LLC
Corgentum Consulting, LLC is a full service hedge fund operational due diligence consulting firm whose focus is on working with investors, including fund of hedge funds, pensions, family offices and high-net worth individuals, to perform comprehensive operational due diligence on hedge funds. Corgentum utilizes proven proprietary methodologies and original operational risk research to diagnose and mitigate operational risk exposures at hedge funds as well as improve upon the overall efficiency and effectiveness of the operational due diligence process. The firm's unique approach leverages off of Corgentum's Resource Network, a team of senior industry practitioners with expertise in law, compliance, hedge fund auditing, and fraud investigation and information technology. Corgentum will also work with hedge funds to prepare for operational due diligence reviews, perform operational efficiency analyses to reduce Operational Drag(SM), to recommend long-term sustainable operational risk solutions. Corgentum is headquartered at 20 Fleet St. in Jersey City, New Jersey, 07306. Phone 201-360-2430. The Web site is www.corgentum.com.
About Jason Scharfman
Jason A. Scharfman holds the position of Managing Partner of Corgentum. He is recognized as one of the world's leading experts in the field of hedge fund operational due diligence. Before he founded Corgentum, Scharfman oversaw the operational due diligence function for a $6 billion alternative investment allocation group called Graystone Research at Morgan Stanley. While at Morgan Stanley, Scharfman was also a senior member of a team that oversaw all of Morgan Stanley's hedge fund operational due diligence efforts allocating in excess of $13 billion to a firm-wide platform of over 300 hedge fund managers across multiple investment strategies. Prior to joining Morgan Stanley, he held positions that focused primarily on due diligence and risk management within the alternative investment sector at Lazard Asset Management, SPARX Investments and Research and Thomson Financial.
No comments:
Post a Comment