FGG's due diligence process is deeper and broader than a typical Fund of Funds, resembling that of an asset management company acquiring another asset manager, rather than a passive investor entering a disposable investment.[...]
"Operational risk" refers to the risk of loss resulting from inadequate or failed internal processes, human resources, or systems, or from external events. Operational failures, including misrepresentation of valuations and outright fraud, constitute the vast majority of instances where massive investor losses occur. Other operational risks include staff processing errors, technology failure, and poor data.
Pricing models, as well as the adequacy, independence, and transparency of valuation procedures, contingency plans, and other trading and settlement procedures are all matters for close scrutiny by FGG professionals.
FGG seeks a sound understanding of whether a hedge fund possesses key controls in the areas of portfolio management, conflicts of interest, segregation of duties, and compliance. FGG carefully assesses the controls and procedures that managers have in place and seek to determine actual compliance with those procedures, often suggesting modifications, separations of responsibilities, and remedial staff additions.
Excellent diagram after the jump.
Fairfield Greenwich Group Due Diligence [fggus.com]
Beat Us To It [Long Or Short Capital]
Posted by guest , Dec 19, 2008 12:01PM
one
Posted by guest , Dec 19, 2008 12:03PM
At least credit longorshortcapital, they had it up yesterday.
Posted by guest , Dec 19, 2008 12:05PM
hahaha... Spitzer was fucked in the ass by Madoff... The Spitzer clan had a bad weekends at Bernies...
Posted by guest , Dec 19, 2008 12:07PM
@2- people still read that site?
Posted by guest , Dec 19, 2008 12:09PM
It seems to me that they didn't do a damn bit of any of these things in the wonderful wheel.
Posted by guest , Dec 19, 2008 12:10PM
I strike again!
-Charles Darwin
Posted by guest , Dec 19, 2008 12:21PM
The finance community should layoff all the people who have been responsible for retarded charts like this over the years that do nothing but waste coloured ink.
Posted by VOL IS KING , Dec 19, 2008 12:28PM
WOW, Chrysler is like a fucking crack whore. They can't even wait to get their welfare check, before they blow the money, they've gotta get a pay day loan advance on their welfare check.
HA!
Cerberus says it will put $2 billion from Chrysler Financial into Chrysler's auto operations to backstop the loan Chrysler is due to get from the Treasury Department. - WSJ
When Genius Failed II: The great race to the bottom, The Gerbil vs. The Triple Headed Dog
(three heads, no brain)
Posted by guest , Dec 19, 2008 12:30PM
@2 DB is famous for stealing OPM without hat tips. It is an organizational thing started by Carney that is now too ingrained to ever leave.
With that said, they do usually do a good job aggregating stories although i'm still disappointed that they haven't run a story/pictures about former playmate Maria Checa who was involved in the Devlin/Bouchareb insider trading ring.
Posted by guest , Dec 19, 2008 12:30PM
that is so awesome.
Posted by guest , Dec 19, 2008 12:33PM
that wheel is hypnotic.....
......yes I will send all of my money to Bernie....
Posted by guest , Dec 19, 2008 12:35PM
@8, Lemmiwinks?
Posted by AJ , Dec 19, 2008 12:35PM
Why do I feel like these guys are bigger scumbags than Madoff?
Posted by guest , Dec 19, 2008 12:38PM
Of all of eight actions.....FGG did zero.
What the hell were they getting paid for? It is like a no show job in Latin America, you only show up to take the check......
Posted by guest , Dec 19, 2008 12:55PM
Is that spermatoza attacking the EGG Team?
Posted by guest , Dec 19, 2008 12:55PM
Look out the window, bitches, and go home. It's snowing!
Posted by miami , Dec 19, 2008 12:57PM
That is a photo of a Ponzi scheme taken from above right?
The money flows from the wider bottom up through the donut hole of $$$ already stolen by the people at the top.
It's perfect.
Posted by guest , Dec 19, 2008 1:01PM
#13 u are right. They are like the clients who use the crooked lawyers who use the crooked private investigators who use the crooked insiders. They knew and they hope they are insulated. It is a very common game.
Posted by guest , Dec 19, 2008 1:03PM
@9 I was wondering the same thing. There are enough douchebags + 1 playboy model in that story to make it DB-worthy. Wonder why it wasn't picked up. Money involved was peanuts compared to Madoff I guess.
http://www.all-photos.net/pictures/d/100727-2/Maria+Checa+picture+a10.jpg
Posted by guest , Dec 19, 2008 1:21PM
SPEAKING OF DEEPER AND BROADER
I got your mom a pajamagram, and well, we all know where it went from there, fuckers
Posted by Anal_yst , Dec 19, 2008 1:24PM
So, let me get this straight, FGG specialized in what, exactly, besides egregious bullsh!t?
Posted by guest , Dec 19, 2008 1:24PM
@9- you have to be joking...db is the place people come to rip shit off (bberg, dealbook, clusterfuck). also? i sent db the link to the fgg link. and i didn't get it from long or short.
Posted by guest , Dec 19, 2008 1:25PM
...my two cents...i was turned down by FFG because my strategy wasnt "out of the box"!
Posted by VOL IS KING , Dec 19, 2008 1:40PM
Rick Wagoner, Hank Paulson and George W. Bush.
Harvard Business School has got to get nervous having its whole alumni brain trust all in the same place at the same time. What if a nuke goes off? Who could save capitalism, without the HBS A-Team?
Posted by guest , Dec 19, 2008 1:41PM
That chart looks like the work of a consultant.
Posted by guest , Dec 19, 2008 2:24PM
@24 don't forget that Big Ben is Harvard alum as well. May not be the B school but close enough.
Posted by guest , Dec 19, 2008 4:08PM
FoFs are a fucking joke. We are not smart enough to pick the stocks, nor do any real work.
That whole segment needs to go out of business. Have you ever met the tools that work at those places? They all walk around like they are fucking George Soros.
Douche, you just pick managers ... and obviously aren't any good at that.
Posted by shiphouse , Dec 19, 2008 9:07PM
@27 - You are the fucking joke. Granted the FOFs that were invested in Madoff should be ashamed of themselves because they obviously did not do any real work, however, many FOFs do perform the real work and avoided this guy like the plague. It is evident that if you do work at a hedge fund you do not understand the importance of FOF’s, at a minimum they provide capital. Somewhat essential to running your business don’t you think?
Posted by guest , Dec 19, 2008 11:38PM
FoF's are unsustainable. I agree with 27. I work for an endowment. I don't need to pay the layer of fees on the FoFs. there is not a fund in the world that I can't access directly now.
And sure they may not all have had Madoff, but plenty had Bayou, Zwirn, Whitebox, Stewardship etc...
Posted by guest , Dec 20, 2008 1:08PM
I would argue that FoF's in their current incarnation are unsustainable; fees are currently too high for what the FoF's are supposed to bring to the table. I would see them turning into shops creating bespoke portfolios for institutions/ultra high net worth individuals. The weak ones (bad management, shitty decision making, finger-in-the wind due diligence) will crumple and pass away, or get their distressed portfolios bought out at cents on the dollar by the survivors.
Posted by guest , Dec 22, 2008 1:25AM
There are some interesting Madoff updates and takes on due diligence in this blog. Kind of funny:
http://thecreativedestructionist.blogspot.com/