Due Diligence Background Checks for Wall Street for the Capital Markets, and Fund of Funds
Hedge Fund Fraud
Please refer to CheckFundManager for documents that supersede this page.
On September 30, 2003, newly appointed SEC Chairman William H. Donaldson
testified before the U.S. Senate Committee on Banking and walked a political tightrope
with regards to hedge-fund regulation and registration of hedge fund advisers.
New York Attorney General Eliot Spitzer's recently announced a $40 million settlement with Canary Capital Partners,
a hedge fund that allegedly engaged in illegal trading schemes with several large mutual-fund companies.
Spitzer alleges that Canary engaged in two fraudulent schemes: late trading and market timing.
He is investigating several other firms with regards to similar fraud.
Spitzer's efforts lead
to the prosecution of Steven Markovitz, a former hedge fund trader with Millennium Partners, who pleaded guilty to securities
fraud and engaging in illegal late-day trading.
Merrill Lynch then fired three brokers who had dealings with Millennium Partners.
Paul Roye, director of investment management at the SEC,
said at a recent Investment Company Institute conference:
"In recent years, as hedge fund assets have grown, we have also seen
an unfortunate growth in hedge fund-related fraud,
The Commission has had to bring far too many hedge fund fraud cases
in circumstances where the losses to investors have been substantial. The
Commission will continue to be vigilant in identifying those cases."
Our goal is to identify the hedge funds and fund managers who could expose
your capital to undue risk. Here are some examples taken from our
inventory of
over 16,000 background checks we have conducted on hedge fund managers.
Over the years, we have helped to protect the capital base
of hundreds of capital market and other companies that invest in these alternative investments.
For the first example, one investment firm we evaluated has 12 Federal Civil suits against them for misleading
investors. They won control of the company by promising
the shareholders they would either buy out their stock or sell the
company. What they acutally did was to appoint themselves to the
board of directors, approve
huge salaries for themselves, and then say they could not sell the company because of the cost of
the payouts to executives! Would you want this firm
handling your money today?
Over time, we have found a court case or some other exception in about 15% of the cases.
Please view
the statistical distribution of these findings.
Members of our service can also view a
detailed explanation (pdf) of our Due Diligence report.
Most of the people we research are clean, honest, respectable individuals with
unblemished records.
Would it surprise to to learn though that an active manager of a mutual fund
we evaluated had his securities registration revoked for 5 years,
all of his trading priveledges suspended, and was fined $150,000 yet
is back in business today?
His offenses included
CHEATING, DEFRAUDING, FALSE STATEMENT OR RECORDS,
BUCKETING OR OFFSETTING ORDERS, FICTITIOUS SALES,
and REPORTING NON BONA-FIDE PRICES. If you were a hiring manager
at an investment firm, would you knowingly hire this person to
trade on your customer's accounts today?
In our second example, a fund manager we researched bought a $5 million estate
and expensive cars for himself and his porno star girlfriend
with money stolen directly from his the fund he was entrusted
to manage.
Had his investors performed a background check on him, they would
have seen where he had filed bankruptcy and had been in financial
trouble 5 years before. They could have saved themselves millions.
We have found drug possession convictions in addition to the
more common "white-collar" crime of insider trading, stock price manipulations, yield burning, and fraud on these same individuals.
How can we help you investigate the people and companies that invest and manage your
company or customer's money?
Our "Due Diligence Background Checks for Wall Street"
report will do just that. Please continue reading if you want to learn
about the report entails. If you are ready to start your business account
with us today, you can set up your business account online using the
links below or you call us at 888-523-4565.
Be assured that this process is totally confidential. Your own identity
is safeguarded. We do not contact the manager under investigation, nor is he
aware that he is being investigated.
Executive Summary
This is a three page summary of all of the pertinent
information on the person being investigated.
Name, SSN Validation and Possible Addresses Associated with Subject
The first detailed section of the report identifies the person being investigated.
His name, date of birth, address history, and that state that issued his
social security number are indicated. His actual social security number
is not disclosed.
Hedge Fund Fraud
Please refer to CheckFundManager for documents that supersede this page. On September 30, 2003, newly appointed SEC Chairman William H. Donaldson testified before the U.S. Senate Committee on Banking and walked a political tightrope with regards to hedge-fund regulation and registration of hedge fund advisers.New York Attorney General Eliot Spitzer's recently announced a $40 million settlement with Canary Capital Partners, a hedge fund that allegedly engaged in illegal trading schemes with several large mutual-fund companies. Spitzer alleges that Canary engaged in two fraudulent schemes: late trading and market timing. He is investigating several other firms with regards to similar fraud.
Spitzer's efforts lead to the prosecution of Steven Markovitz, a former hedge fund trader with Millennium Partners, who pleaded guilty to securities fraud and engaging in illegal late-day trading. Merrill Lynch then fired three brokers who had dealings with Millennium Partners.
Paul Roye, director of investment management at the SEC, said at a recent Investment Company Institute conference: "In recent years, as hedge fund assets have grown, we have also seen an unfortunate growth in hedge fund-related fraud, The Commission has had to bring far too many hedge fund fraud cases in circumstances where the losses to investors have been substantial. The Commission will continue to be vigilant in identifying those cases."
Our goal is to identify the hedge funds and fund managers who could expose your capital to undue risk. Here are some examples taken from our inventory of over 16,000 background checks we have conducted on hedge fund managers. Over the years, we have helped to protect the capital base of hundreds of capital market and other companies that invest in these alternative investments.
For the first example, one investment firm we evaluated has 12 Federal Civil suits against them for misleading investors. They won control of the company by promising the shareholders they would either buy out their stock or sell the company. What they acutally did was to appoint themselves to the board of directors, approve huge salaries for themselves, and then say they could not sell the company because of the cost of the payouts to executives! Would you want this firm handling your money today?
Over time, we have found a court case or some other exception in about 15% of the cases. Please view the statistical distribution of these findings. Members of our service can also view a detailed explanation (pdf) of our Due Diligence report.
Most of the people we research are clean, honest, respectable individuals with unblemished records. Would it surprise to to learn though that an active manager of a mutual fund we evaluated had his securities registration revoked for 5 years, all of his trading priveledges suspended, and was fined $150,000 yet is back in business today? His offenses included CHEATING, DEFRAUDING, FALSE STATEMENT OR RECORDS, BUCKETING OR OFFSETTING ORDERS, FICTITIOUS SALES, and REPORTING NON BONA-FIDE PRICES. If you were a hiring manager at an investment firm, would you knowingly hire this person to trade on your customer's accounts today?
In our second example, a fund manager we researched bought a $5 million estate and expensive cars for himself and his porno star girlfriend with money stolen directly from his the fund he was entrusted to manage. Had his investors performed a background check on him, they would have seen where he had filed bankruptcy and had been in financial trouble 5 years before. They could have saved themselves millions.
We have found drug possession convictions in addition to the more common "white-collar" crime of insider trading, stock price manipulations, yield burning, and fraud on these same individuals.
How can we help you investigate the people and companies that invest and manage your company or customer's money?
Our "Due Diligence Background Checks for Wall Street" report will do just that. Please continue reading if you want to learn about the report entails. If you are ready to start your business account with us today, you can set up your business account online using the links below or you call us at 888-523-4565. Be assured that this process is totally confidential. Your own identity is safeguarded. We do not contact the manager under investigation, nor is he aware that he is being investigated.
Executive Summary
This is a three page summary of all of the pertinent
information on the person being investigated.
Name, SSN Validation and Possible Addresses Associated with Subject
The first detailed section of the report identifies the person being investigated.
His name, date of birth, address history, and that state that issued his
social security number are indicated. His actual social security number
is not disclosed.
Property Records Associated with Subject
The next section of the report shows property sale and assessment information,
as well as Possible Business Associates listed at the same addresses.
Corporate Records
This section of the report shows
incorporation documents containg the applicant's name.
The state of incorporation, filing status, and names of
other corporate officers are typically included.
Business & Employment records
The next section of the report verifies the identity of the business
the person is associated with. It may contain Dunn & Bradstreet listings,
corporate registries, and other information on the affiliated company or companies.
Public Business References and SEC Insider Trading
The next section of the report can be very long as it contains
references to the person being investigated in news services and business publications.
Insider trading documents are
found and reported on in this section.
We perform a thorough records search for relevant public documents.
The report you receive is full of active links
to the actual source of the documents we find.
This feature distinguishes us from
our competition. Where they give you a 'static' report, ours is an
'active' document.
Regulatory Registrations
This section of the report shows
any registration numbers found and any warnings,
offenses, or fines reported by these two primary regulatory agencies,
the National Association of Securities Dealers, and
the National Futures Association. We also examine company
disclosures on file with the SEC's Investment Advisory bureau.
We will also examine
the Federal Denied Persons list to
determine if the U.S. Department of Commerce believes the person
is associated with money laundering, terrorism, or other anti-US activities.
National Bankruptcies, Liens and Judgments
This section of the report indicates
any
National Bankruptcies, Liens or Judgments
found for the candidate across the United States.
Federal Criminal, Civil, Appellate
This section of the report indicates
any Federal court cases found for the
candidate as a plaintiff or defendant.
His company may also be searched for records here.
SEC Cases & Proceedings
Federal court cases brought by the Securities and Exchange Commission of
the United States are researched and found in this section. Research also
includes hearings and documentation including those of the Stock Exchange
Enforcement Division as well as Administrative Proceedings.
His company may also be searched for records here.
Educational Verification
We will confirm the
educational degrees and dates reported by the
candidate with the granting institutions.
National State/County Criminal, Parole, Probation, Dept. of Corrections
This section of the report indicates
any state or county criminal court cases
or department of corrections record found for the
candidate.
Civil Court Records
This section of the report indicates
any civil court cases
found for the candidate. This is a national search. We research every state and county jurisdiction.
His company may also be searched for records here.
International Coverage -
We can also research companies and individuals in the UK, and offer two different reports for the UK. Order our "Comprehensive Report" to obtain our standard UK records based report. We also offer a "FRAUD AUDIT" which is more "investigative" in nature.
The "FRAUD AUDIT" report could certainly be used to establish Patriot Act customer identification compliance, as it includes these international resources;
- US Office of Foreign Asset Control (OFAC) Compliance
- United Nations Consolidated List
- European Union Terrorism List
- World Bank Debarred Parties
- US Bureau of Export Administration Denied Persons List
- Department of State Defense Trade Controls (DTC) Debarred Parties List
- Bank of England Sanctions List
- Global Money Laundering Database
- Unauthorized Banks
- World Bank Debarred Parties
- International Investment Disputes
- US Bureau of Export Administration Denied Persons List
- Financial Criminals & International Financial Regulatory Violators Check
- International Media Key Word Search
- Asian Corrupt Government Officials Database
- Politically Exposed Persons
- International Media Key Word Search
- United Nations Consolidated List
- US Office of Foreign Asset Control (OFAC) Compliance
- Bank of England Sanctions List
- Office of the Superintendent of Financial Institutions (OSFI) - Canada
- FBI Most Wanted
- FBI Seeking Information
- FBI Most Wanted Terrorists
- FBI Hijacking Suspects from 9/11/2001.
- All research performed in our "Comprehensive" report
The "Comprehensive" report we conduct in the UK is less than half the cost of the "FRAUD AUDIT" yet is still very effective. It includes:
- Personal identification information, marital status, address history
- Civil prosecutions, aka County Court Judgements
- Bankruptcies research
- Manual search of Insolvencies records for each of the past 7 years
- Regulatory registrations, reparations and actions
- Property ownerships, past and present, value, and all registered actions and foreclosures
- Disqualified Directors research
- Corporate affiliations, directorships held, past and present
- Company Capital and list of Directors report
- Investment and other media research
- International media research
- Dow Jones sources media research
- Internet research
- US Office of Foreign Asset Control (OFAC) Compliance
- SEC publications research
For those on a budget, we can perform specific research on your UK managers and companies. For example:
- UK Civil prosecutions, aka County Court Judgements
- UK Bankruptcies research
- UK Manual search of Insolvencies records for each of the past 7 years
- UK Disqualified Directors research (on the manager)
- UK Company Capital and list of Directors report
International Coverage -
We can also research companies and individuals in other countries under our "FRAUD AUDIT" report as described above. For example, here is a partial list of what our researchers can access in Switzerland:
- Personal information, marital status, address history
- Tax figures
- Civil prosecutions
- Property and other personal asset ownership, value, and foreclosures
- Financial assessment
- Educational verification
- Corporate affiliations, directorships held, duration of tenure, and corporate mandates
- Financial obligations
- SWX Swiss Exchange and Zurich Stock Exchange
Here is a partial list of what our researchers can access in Italy:
- Vital Records Check (name, date of birth, address).
- Criminal Records arrest reports, sentences, and warrants.
- Driving license suspensions
- Corporate Directorships/Small Business Ownership
- Shareholdings of non stock exchange listed companies
- Balance sheets on LTD liability company
- Negative Business Records (Bankruptcy, Receivership, Liquidation, Liens, Judgements, etc.)
- Bad/Bounced Cheques/Promissory Notes
- Company Audits by CONSOB, the Italian Securities Board
- Confidential Local Neighbourhood Reputation canvas
- National and Local Press Search
- Full Italian financial media research
- Professional Association Membership
- Income Tax Files for the last 10 years
- Credit report and 5 year credit history
Here is a partial list of what our researchers can access in the Netherlands:
- Vital Records Check (name, date of birth, address).
- Criminal Records as reported to the media
- Corporate Directorships/Small Business Ownership
- Negative Business Records (Bankruptcy, Receivership, Liquidation, Liens, Judgements, etc.)
- National and Local Press Search
- FIOD (Fiscal Investigation Department) research
- Professional Association Membership
- Debt and payment history reputation
- Property Ownership
- Real Assets
International Coverage -
Here a partial list of what our "FRAUD AUDIT" report covers in Sweden:
- Personal and company information
- Date of Birth, Social Security number, driver's license
- Address History
- Residential Property assets
- Vehicles and other personal assets
- Marital Status
- Current Company name & directorship positions
- Current & past Company affiliations
- Educational verification
- Income and salary information
- Taxable Assets
- Bankruptcy records
- Bailiff Office utmätning (Liens)
- Criminal prosecutions and sentences
- Civil suits and prosecutions
- Debts & judgments
- Newspaper/magazine/media research
- Company sanctions with the Swedish Stock Exchange Financial Supervisory Authority
International Coverage -
Here a partial list of what our "FRAUD AUDIT" report covers in France:
- Personal and company information
- Company affiliations
- Employment history
- Educational verification
- Income and salary information
- Bank accounts
- Bankruptcy records
- Other personal assets
- Newspaper/magazine research
- Criminal records
- French Exchange Operation Commission research
International Coverage -
Here is a partial list of what our "FRAUD AUDIT" report will research in South Africa:
- The 3 major SA credit agencies (personal and company credit history, ratings and adverse reports, including Civil Court records)
- The Company Registrar (company affiliations)
- The Deeds Office (9 separate data base searches for properties registered
- property related contracts, i.e. mortgages, and sequestrations)
- Employers Mutual Protection Service (a record of staff dismissed for dishonesty)
- The proprietary Wolf Data Base (a record of reports of corruption and fraud)
- The ITC 'Hawk' data base (a record of reports of aliases, theft and fraud)
- All major SA newspaper/magazine archives
- Johannesburg Stock Exchange Surveillance department (similar to the US SEC)
International Coverage -
Here a partial list of what our "FRAUD AUDIT" report covers in Canada:
- Civil court filings (personal and company)
- Corporate affiliations
- Personal Property Security Act Lien Registration database
- Education verification
- Ministry of Transportation registrations, addresses, and violations
- Phone listings
- Criminal records
- All major Canadian & provincial newspaper/magazine archives
- The Federal Government Office of the Superintendent of Bankruptcy records
- Canadian Securities commissions (Ontario Securities Commission for Toronto, or the Quebec Securities Commission for Montreal for example) registrations and violations
International Coverage -
We can now conduct civil court research throughout many islands in the Carribean. Generally speaking, most companies that are incorporate in Bermuda, the British West Indes, the Bahamas, and elsewhere in the Carribean have on shore operations as well. Some of the Carribean islands have reguatory bodies, some do not.
International Coverage -
Here a partial list of what our "FRAUD AUDIT" report covers in Australia:
- Company report with both personal biographies and financial information
- Company Registrar (company affiliations)
- The Titles Office (properties, mortgages and values)
- Litigation listings
- National Personal Insolvency Index
- All major SA newspaper/magazine archives
- Australian Securities and Investments Commission (ASIC) registrations and violations
International Coverage -
Knowing the managers Hong Kong Identification number and Chinese name opens the door to research that can be performed there. Without it, results can vary.
Report Enhancements history
- 1999 National Due Diligence capability established
- 1999 Online report ordering and retrieval system goes online
- 2000 Interactive "Live" links added
- 2001 Multiple news/media publications research
- 2001 Multiple state criminal records checks
- 2001 SEC references written filings research
- 2001 Regulatory body research
- 2001 Executive Summary added
- Jan 2002 International network of investigators first established
- Jan 2002 - Corporate research includes checking Federal court records for entries by corporate name.
- March 2002 - Standard searches extended to the UK
- April 2002 - Enhanced Summary section descriptions: Personal narrative written to give executives a quick read and overview.
- April 2002 Federal Denied Persons lists examined
- May 2002 Multiple County Level Felony Misdemeanor searches
- June 2002 - Follow up retrieval and delivery of court documents
- August 2002 Local Civil suit search by primary Business Name search
- September 2002 State level regulatory enforcement research
- October 2002 Non-public information research from the SEC
- January 2003 All 50 state civil litigation research
- March 2003 Due Diligence Background check database brought online
- April 2003 "Inventory" of research surpasses 2000 reports
- May 2003 "Fund Manager Basic" report introduced
- June 2003 Low cost UK Civil Courts and UK company report introduced
- July 2003 "Fund Company Basic" report introduced
- August 2003 "Inventory" of research surpasses 2500 reports
Included in the Standard report:
- Name, Social Security Number Validation and Addresses verification
- Property record research
- Summary list of Corporate & Business affiliations
- Investment Publications research
- SEC (NFA/CFTC & NASD) Regulators Registrations
- SEC Cases & Proceedings
- NASD Disclosure and events research
- NFA/CFTC disciplinary actions
- National Bankruptcies, Liens and Judgments
- Federal criminal, civil, appellate (subject and primary company)
- Educational Verification
- Professional credentials Verification
- Research Parole, Probation, Dept. of Corrections
- Multiple State criminal records
- County level criminal record search
- 50 State Civil court records
- 50 State UCC, liens, judgments research
- Basic level media and news publication search
- U.S. Federal Denied Persons list including, money laundering, terrorism or other anti-US activities.
- Executive Summary
Additional research in the Comprehensive report:
- Top Priority status over Standard Reports
- Single report can include both the manager and the company
- LOCAL enforcment commissioners research on company
- Request for Non-published incidents of disciplinary actions research
- Federal criminal, civil, appellate (subject and multiple companies)
- 50 State Civil court records on multiple company names
- Extensive Media (up to 25 years) and news publication research
- Biographical summary of media and publications research
- Executive Overview, with Biographical summary of media and publications
- For the United Kingdom: directorship, property records, and litigation (other countries available at an additional charge)
Call for International Investigation prices.
Difference between the Standard and Comprehensive:
A single comprehensive report request can be used to conduct research on BOTH the company and a manager.
We recommend requesting a comprehensive report on the primary manager and the company,
then, standard reports on subsequent managers.
- Report request options:
- Comprehensive report, primary manager and company
- Standard report, manager
- Comprehensive report, manager
adds an expanded (full text of articles) media,internet, and summary. - Standard report, company
adds an expanded (full text of articles) media,internet, and summary. We will also contact our network of LOCAL enforcment commissioners and look for non-published incidents of disciplinary actions.