Independent Process of Operational Due Diligence
P A G E
Industry case
About Laven Partners
Expertise in Operational Due Diligence
Operational Due Diligence methodology
Laven Partners’ Due Diligence Manager
What our clients say
Management team
Disclaimer
Contents
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10 December 2008: Bernard Madoff confessed to running a large Ponzi scheme. Madoff says the
business had lost about $50 billion
In June 29, 2009: Madoff was sentenced to 150 years in prison
February 15, 2011: In an interview from prison, Madoff told a New York Times reporter that some
banks and hedge funds "had to know“…
This fraud is not unique and soon after, during 2009, the first UK fraud Weavering Capital was
revealed. This was on a smaller scale with losses of $530 million but the repercussions were high
These scandals have caused a paradigm shift for investors and regulators and a search for better due
diligence practices. How can Laven Partners help?
Madoff and other frauds
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P A G E
Established in 2005 by a forward-thinking finance solicitor and hedge
fund COO – Jerome Lussan – Laven Partners is a global consultancy and
regulatory software publisher, servicing the financial industry with a vision
to empower investors, brokers and managers by offering regulatory
solutions that improve operational processes and structures.
Today, Laven Partners remains committed to those same principles and
continues to assist clients with their business challenges.
Expertise. Vision. Confidence.
Since 2009, Laven Partners has held the ISO 9001:2008 quality standard
designation for the quality and reliability of its independent process of
operational due diligence (IPODD)
In June 2012, Laven Partners published the FT Guide to Investing in
Funds, authored by Jerome Lussan
Introduction
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Certificate No. FS553272
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Key facts
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Headquartered in London, with subsidiaries in New York, Geneva and
the Caribbean. Laven Advisors LLP is a regulated MiFID firm in the UK
Independent privately held entity for more than 10 years. The board of
directors of Laven Holdings Ltd shares a strong sense of personal
responsibility for the activities of the group
Offering a suite of regulatory software, the Due Diligence Manager, the
Digital Compliance Assistant and the KYC Assistant
20 subject matter experts across the offices around the globe
Over USD300 billion of clients by size, covering 17 regulatory systems
Laven Partners is a member of the Alternative Investment Management
Association (AIMA)
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Through our vision and Laven Partners’ One Mind concept linking
operational, regulatory and risk expertise, Laven Partners is uniquely
placed to understand the business of our clients.
We are leaders in the financial industry in providing intelligent and
intuitive commercial and practical advice, giving clients the benefit of our
diversified, yet balanced expertise.
Ensuring that knowledge and skills are accessible to everyone
characterizes our culture; it drives confidence and supports the
Company’s vision. We combine the unique One Mind approach with a
strong team ethic, devoted project management and proprietary IT
systems. As a result, the various departments can utilize staff from other
departments thus providing the needed subject matter expertise.
Laven Partners’ One Mind ethos
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Laven Partners’ unique model
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Laven Partners has pioneered due diligence services for the past decade. We combine strong
expertise and proprietary technology to deliver the industry’s most comprehensive operational due
diligence services in a cost efficient manner:
automated due diligence software - Due Diligence Manager © software (the DDM)
bespoke templates and scope, developed to match client’s specific needs
competences in operational, legal and regulatory matters
time saving methodologies and report duplication functionalities
competitive fees
recognized innovative products
no conflicting investment advisory business
process driven with ISO certification
strategies covered range from classic equity, credit, fixed income, to global macro, CTA, fund of
fund, managed account platforms, private equity, and real estate or other illiquid strategies
extensive on-site visits with managers for outsourced work
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Due diligence is about understanding a manager’s internal operations to
protect investors from losses which are related to operational failures or
frauds. Minor violations that are overlooked or ignored can feed bigger ones
and can foster a culture where laws are increasingly treated as ‘toothless
guidelines’.
Our due diligence services provide investors with an independent review of
an asset managers’ operations and investments. Each review assesses the
asset manager and the fund’s commitment to regulations and industry best
practice standards. Our outsourced process comprises of reviews of
documentation provided by the fund manager, followed by independent
corroboration of the information with service providers and through an on-
site visit.
Our reviews are based on a comprehensive check of over 520 red flags
and concerns that are derived from regulatory laws from Europe, North
America and Asia and best practice standards.
Meeting best practice standards
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Trade associations used for
best practice standards in
our ODD process:
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Recommended report topics for
operational due diligence reviews
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Risk managementrisk management function, risk
committee, valuation risk,
counterparty risk
Fundstructure, corporate governance, fees & expenses,
offering memorandum
Service providersadministrator, prime broker/custodian,
depositary, auditor, legal counsel
Management entitiesstructure, corporate governance, investment
management agreements
HR, IT & Insurancekey individuals and employees, IT &
business continuity, insurance
Front to back office portfolio manager, investment committee,
order management, back office resources,
reconciliation of orders, shadow accounting
and NAV confirmation
Compliancestatus, officer, procedures and controls, training,
insider trading, AIFMD/UCITS/FINMA/SEC/CFTC
& NFA/MAS/SFC regulations, fund distribution
ESGESG policy, ESG officer, ESG reports
Background checksweb searches, KYC checks, investor references
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Laven Partners’ workflow
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Key documentsService providers
questionnairesOnsite visit Debriefs Report delivery
Trust, but Verify
Technology
analysis of the fund’s
key documentation
analysis of completed
independent
questionnaires
received from the
fund’s key service
providers
(Administrator,
Custodian, Prime
Broker, Auditor and
Legal counsel,
where applicable)
onsite due diligence
visits with the
investment manager
or advisor, where
the aim is to
question senior
management as well
as junior staff on
their roles and
responsibilities
pre-onsite and post-
onsite debriefs with
clients and the
relevant investment
manager or advisor
production deadlines
of 4 to 6 weeks
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Developments of our DDM software
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The DDM allows subject matter experts (lawyers, compliance, operation and risk consultants) to focus on
their areas of expertise while ensuring time efficiencies and project management
The DDM is designed to remove errors and inconsistencies in the content and the creation of the report
The DDM includes a customizable compliance module to support AIFMD, UCITS, FINMA, SEC, CFTC &
NFA, MAS and SFC requirements
2006 2009 2014 2016
Laven Partners
originated digital
web-based
questionnaires
Created web-
based ODD
system called the
Red Flag Database
Laven Partners developed the Due Diligence Manager©
(the ‘DDM’) digitalising operational due diligence and
report production
Laven Partners reviews the DDM
quarterly to reflect changing laws
and best practice standards
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How the DDM is used
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DDM
The DDM is used to aggregate information
flow and to match it to content checks. The
content analysis covers operational areas of
interest to the specific client, allowing for the
implementation of their own questionnaires
and templates. Manager information is then
linked to prescribed answers derived from
facts and measured against applicable laws
or best practice standards. The DDM further
publishes a real time review of the information
raising issues automatically for the user. The
user will see red flags (a breach of law or
regulation), or concerns (a breach of best
practice standards) and is able to add further
commentary. Reports are automatically
produced into a PDF format and can include
the results of the DDM’s scoring engine.
The DDM technology is used during Laven
Partners’ outsourced ODD work. It can
also be licensed directly by clients.
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Bespoke templates and customisation
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The format of the DDM can be built using clients’ own templates and methodologies or alternatively can
be based on templates developed by Laven Partners, covering long only funds, hedge funds, private
equity and real estate funds.
Strategy specific templates are further tailored
for each fund by configuring modules within a
template (essentially sections in a report). This
offers further flexibility to capture the desired
content. Users (depending on user level rights)
are given the optionality to edit the scope of
each report by enabling or disabling different
modules.
The option to add additional content outside a
standard template is also included in each
module, and users can choose whether to raise
a red flag or a concern in relation to the
additional content.
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Key benefits of the DDM
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Efficiencies time savings and reduced human errors
Bespoke templates development to cover different strategies from long only to long-short, as well
as more illiquid products. Flexible user driven configuration for all templates
Module customisation for specific areas depending on client’s needs and processes and corporate
identity
Legal and regulatory updates with new questions and answers added to reflect changing laws and
best practice standards
Compliance modules covering rules and regulations from different jurisdictions (AIFMD, UCITS,
FINMA, SEC, CFTC & NFA, MAS, SFC) and best practice standards from leading industry
associations (AIMA, MFA, ILPA and Invest Europe)
Systematic scoring of more than 140 review points including a grade broken down by chapter
Workload monitoring and delegation progress monitoring, various user rights, audit trail of changes
made, internal messaging system
Storage and aggregation of all fund documents as well as reports in one place
Diary functions for deadlines and planning for future monitoring
Search by fund name, manager name, score, strategy and other criteria
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The DDM in practice
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Easy to use dashboard with all
funds / funds worked on
Clear interface with
audit trail
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Client references
‘Laven Partners’ ODD is extremely reliable and coherent. We successfully outsourced parts of our
risk review to them, which allowed us to focus on our areas of focus and our clients.
Global Head Investment Products & Wealth Solutions, Dutch Bank
‘Laven Partners’ ODD has helped us to do more ODD without increasing resources and this has
enabled us to focus on crucial business tasks including decision making based on Laven Partner’s
reports. The service is useful, efficient and has allowed us to benefit from reliable and prompt
delegation.’
Risk Director, US Bank
‘Laven Partners’ ODD reviews content is excellent and we are really pleased with their deliverables,
which meet the requirements set out at the beginning of any project. We would definitely recommend
their services to the industry.
Product Manager Private Equity, German Bank
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Our Management Team
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Jérôme de Lavenère Lussan - CEO
Jerome is the founder and CEO of Laven. His background includes acting as a COO of a hedge fund and as a
financial lawyer at Jones Day. Jerome has a broad degree of expertise in the alternative fund and fund
management industry and is an advisor to many international financial services firms specialising in operations
and regulatory matters. He is a member of the Law Society of England and Wales and of the CFA Society of the
UK. Jerome holds an LLB from the University of Edinburgh. In 2010 and 2011, Jerome was named by Financial
News as one of its 100 Rising Stars, and in 2011 and 2012 as one of its 40 under 40 Rising Stars in Hedge Funds.
Jerome Lussan is also the author of the Financial Times Guide to Investing in Funds.
Tanja Ferri - Managing Director
Tanja has been with Laven Partners since 2007 and works with financial institutions and asset managers, co-
heading Laven Partners’ Operational Due Diligence. Tanja is based in Dublin and provides due diligence consulting
to Laven Partners’ clients in North America, Europe and Asia. Tanja also leads a number of Laven Partners’ private
equity focused projects and has a keen interest in private equity and impact investing. She previously led Laven
Partners’ offshore consulting business in the Caribbean. Prior to joining Laven Partners, Tanja was at the
International Chamber of Commerce in Paris, France. She holds a BA in European Studies from Goldsmiths
College, University of London.
Nick Illsley - Director
Nick is part of the European due diligence team of Laven Partners bringing expertise of various aspects of middle
office and operations within the alternatives space. Previously he trained as a Chartered Accountant with Ernst
and Young before moving to Lehman Brothers where he ran the Euro Medium Term note desk. After that, Nick
joined BlueCrest Capital where he managed part of their Product Control group before going on to head up the
Collateral Management team. Later, he joined Systematica as it span out from BlueCrest to lead their Treasury
and Collateral team. Nick is a graduate of Newcastle and Durham universities and is a CFA Charterholder.
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Our Management Team
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Linhao Guo, CFA,ACCA - Director
Linhao is the group’s financial officer and a member of Laven Partners’ compliance and due diligence team with
regards to risk and investment due diligence. Linhao is focusing on the analysis of financial performance, asset
allocations, risk reporting and risk processes. Prior to joining Laven Partners, Linhao was trained and qualified as a
chartered certified accountant in Leapman Weiss (Charted Accountants), gaining experience in accountancy, audit
and tax on a diverse range of clients. Linhao graduated from Wuhan University of Technology, China with a
Bachelor degree in Management. He is a CFA Charterholder.
George Wood - Director
George is part of Laven Partners’ US team for operational due diligence. He joined the group in 2013 as an
operational due diligence consultant. He is a technology professional within the financial services having spent 15
years implementing technology products for investment management and financial services firms such as T. Rowe
Price, LPL Financial, Calvert Investments, EverBank and D&B. George was previously Senior Vice President at
NASDAQ-listed Viewpoint Corporation. There he was responsible for financial reporting and oversaw the
application of Sarbanes-Oxley accounting controls. George is a graduate from Denison University in Ohio with a
BA in History and English.
Pierre-Edouard Coiffard - Senior Consultant
Pierre-Edouard works with the due diligence department and has over 20 years of experience in the fund
industry. He has an extensive background in sourcing, analysing and monitoring managers as well as strategies,
across all styles and asset classes. Pierre-Edouard previously occupied positions as CIO and Head of Research at
Olympia Capital Management, Integrated Asset Management and Altigefi. Prior to moving into alternative funds,
he was a consultant in the Finance department at Deloitte Touche & Tohmatsu. Pierre-Edouard holds an MBA
from ESSEC and is a graduate engineer from Ecole Centrale de Marseille.
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London
+44 (0) 20 7838 0010
New York
+1 212 935 3606
Barbados
+1 246 844 33 80
Geneva
+41 (0) 22 548 3172
www.lavenpartners.com
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Disclaimer
Laven Partners Limited is registered in England and Wales (registered number 04829021) with its registered office at 11
Old Jewry, London EC2R 8DU.
The material, its content and associated documents are confidential and may not be disclosed, reproduced or otherwise
given to any third party. This information should not be relied upon. The material is intended only to facilitate your
discussions with Laven Partners Limited. The content is subject to change. No representation, warranty or undertaking,
express or implied, is made or given by Laven Partners Limited or any representative of Laven Partners Limited as to
the accuracy, reliability or completeness of the content. In no event will Laven Partners Limited or any of its directors,
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does not provide tax advice. Any information and opinions contained herein are presented on the basis as at the date of
this document only.
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