Good Risk Governance Pays

Good Risk Governance Pays

Investment Best Practices | Risk Management | Valuation

Category Archives: Liquidity

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Investment Vendor Due Diligence and the Fiduciary Rule

Posted in Compliance, Credit Risk, Disclosure and Transparency, Fiduciary Liability, Financial Reporting, Liquidity, Susan Mangiero
When I was a university professor and gave written homework, I frequently found myself in the position of having to remind students that reliance on a spell checker may not always produce good results. “I through the ball” is grammatically incorrect but would not reveal itself as an error. Someone would have to know that “threw” is… Continue Reading

Tradeoff Between Lower Hedge Fund Fees and Longer Lock Ups

Posted in Fees, Hedge Fund, Liquidity
As I’ve written many times, assessing whether a product or strategy makes sense for a particular investor (whether individual or institutional) depends on facts and circumstances. At a minimum, one has to consider what an investor seeks to accomplish, relevant constraints, need for liquidity, overall risk tolerance and the risk-return profile of the product or strategy. Costs… Continue Reading

Unicorns, Valuation and the Search for Investment Returns

Posted in Investment Management, Liquidity, Pension, Private Equity, Valuation, Venture Capital
Thanks to Matthew Crow, President of Mercer Capital, for an interesting analysis of regional venture capital trends. In his blog post entitled “Are VC trends the canary in the RIA coal mine?” he points out that valuations in New York, Silicon Valley and Boston are deemed by many as “too high.” As a result, venture… Continue Reading

SEC and Asset Manager Disclosures About Use of Derivatives

Posted in Derivatives, Disclosure and Transparency, Investment Management, Liquidity, Regulation, Valuation
Notice anything odd about this announcement? Are we to celebrate this creamy dessert on May 21, 22, 23, 24 and 25? If so, why is the event referred to as a “day” celebration? A quick search on the internet informs that National Vanilla Pudding Day is in fact May 22, 2015 and does not span… Continue Reading

Investment Risk Management, Kanye West and Paul McCartney

Posted in Broker Dealers, Compliance, Disclosure and Transparency, FINRA, Investment Management, Liquidity, Regulation, Risk Management, Valuation
Thank heavens for the absurdities of life. A few chuckles here and there make the difference between blah and pizzazz in life. A recent example is the Twitterverse response to a recent artistic collaboration between Kanye West and Paul McCartney. Supposedly some of the members of the younger generation are unaware of this Beatle’s musical eminence. See “Genius… Continue Reading

Using Leverage to Chase Returns

Posted in Derivatives, Disclosure and Transparency, Financial Reporting, Investment Management, Leverage, Liquidity, Litigation, Municipal Bonds, Pension, Regulation, Risk Management
It is no secret that pension economics is becoming the topic du jour in public finance land. On August 11, 2014, the U.S. Securities and Exchange Commission (“SEC”) made known its allegations of securities fraud against the State of Kansas. According to the official cease-and-desist order, information made available to municipal bond investors “failed to… Continue Reading

Due Diligence & Regulatory Hot Buttons: What Advisors Need to Know About Liquid Alts

Posted in Derivatives, Hedge Fund, Liquidity, Mutual Funds
I am delighted to join a top-notch panel of financial speakers to talk about the explosive growth in the liquid alternatives (“alts”) market. Courtesy of the Center for Due Diligence, our session will take place on October 15, 2014 in San Antonio, Texas and will be part of what is expected to be a lively and informative conference… Continue Reading

Muni Bonds, Pensions and Financial Disclosures

Posted in Compliance, Derivatives, Disclosure and Transparency, Financial Reporting, Hedge Fund, Liquidity, Litigation, Municipal Bonds, Pension, Regulation
I had the pleasure of co-presenting on February 19 with senior attorney Elaine Greenberg as part of an educational briefing for the Practising Law Institute. A partner with Orrick, Herrington & Sutcliffe LLP and the former chief of the Municipal Securities and Public Pensions Enforcement Unit, part of the U.S. Securities and Exchange Commission (“SEC”), Attorney… Continue Reading

SEC Chief Announces Hedge Fund Enforcement Priorities and Fiduciary Lens

Posted in Compliance, Hedge Fund, Liquidity, Regulation, Risk Management, Valuation
Hedge funds have some new items to add to their “to do” list for 2013. In a recent talk before compliance professionals, Bruce Karpati, Chief of the Asset Management Unit (part of the Division of Enforcement of the U.S. Securities and Exchange Commission), gave the audience a roadmap to his opinions about the priorities in… Continue Reading

Investment Fraud Early Warning Signs

Posted in Compliance, Disclosure and Transparency, Financial Crisis, Hedge Fund, Liquidity, Private Equity, Risk Management
My comments on April 3 about investment fraud and risk governance struck a chord. As a co-presenter for “Going Beyond the Essential Background Checks: Accessing Crucial Information About the Management Team, Board of Directors, the Economics for the Team and the Succession of the Investment Staff,” 4th Annual Due Diligence & On-Going Monitoring of Alternative Investments Summit,… Continue Reading

Europe Readies For High Frequency Trading Compliance

Posted in Disclosure and Transparency, Liquidity, Regulation, Trading
In addition to sovereign debt restructuring, European financial market executives have a new mandate – high frequency trading governance. On February 24, 2012, the European Securities and Markets Association (“ESMA”) published the final version of “Guidelines on systems and controls in an automated trading environment for trading platforms, investment firms and competent authorities” in all… Continue Reading

Liquidity Risk and Economic Damages

Posted in Hedge Fund, Liquidity, Litigation
According to “Insider Probe Impact Felt by Pension Funds” by Steve Eder (Wall Street Journal, January 24, 2011), those hedge funds that are being investigated by the FBI may find themselves confronted with even more challenges. If they are forced to sell positions that are deemed “bad” because they resulted from the use of material,… Continue Reading

Private Equity and Fiduciary Risks

Posted in Fiduciary Liability, Liquidity, Private Equity, Venture Capital
According to “Private Equity Investing in Trust” by Pascal Levensohn (Trusts & Estates, July 2010), professional trustees and family office fiduciaries should exercise caution in evaluating the illiquid nature of private equity and venture capital allocations. Describing initial public offerings (“IPOs”) as “elusive,” Levensohn urges decision-makers to “show the completion of a process of diligent review”… Continue Reading