Jason Scharfman

Compliance has become one of the fastest-growing areas in the private equity (PE) space. Mirroring trends from the hedge fund industry, recent surveys indicate that PE managers rank compliance as the single most challenging aspect of their business. Reports also indicate that PE compliance spending has rapidly outpaced other PE operating costs with recent estimates indicating that individual PE funds on average spend at least 15 - 20% of their operating budgets on this area. General Partners… Show more

Compliance has become one of the fastest-growing areas in the private equity (PE) space. Mirroring trends from the hedge fund industry, recent surveys indicate that PE managers rank compliance as the single most challenging aspect of their business. Reports also indicate that PE compliance spending has rapidly outpaced other PE operating costs with recent estimates indicating that individual PE funds on average spend at least 15 - 20% of their operating budgets on this area. General Partners (GPs) have also significantly ramped up the hiring of private equity compliance related roles.

Private Equity Compliance provides current and practical guidance on key private equity (PE) compliance challenges and trends. Packed with detailed, practical guidance on developing and managing a private equity compliance program, it offers up-to-date case studies and an analysis of critical regulatory enforcement actions on private equity funds in areas including conflict of interest, fees, expenses, LP fun raising disclosures, and valuations:
• Provides real-world compliance guidance
• Offers information that is tailored to the current compliance practices employed by GPs in the private equity industry.
• Provides guidance on managing the compliance risks associated with cybersecurity and information technology risk Show less

This book provides straightforward, practical guidance toward developing a hedge fund compliance program, drawn from the author's experience training financial regulators, consulting with government entities, and analyzing hedge fund compliance structures across the globe. In-depth explanations of compliance principles are backed by illustrative case studies and examples. Highly in-demand templates of popular hedge fund compliance documentation provide actionable illustrations of key compliance… Show more

This book provides straightforward, practical guidance toward developing a hedge fund compliance program, drawn from the author's experience training financial regulators, consulting with government entities, and analyzing hedge fund compliance structures across the globe. In-depth explanations of compliance principles are backed by illustrative case studies and examples. Highly in-demand templates of popular hedge fund compliance documentation provide actionable illustrations of key compliance policies. Designed to assist investors, fund managers, service providers, and compliance job seekers directly, this book describes the fundamental building blocks of the hedge fund compliance function. Compliance is one of the fastest growing areas in the hedge fund space. This reference book provides an essential foundation in modern hedge fund compliance, reflecting the recent changes of this dynamic field. Show less

Contributed a chapter on private equity operational due diligence (ODD) approaches and Limited Partner (LP) investigative due diligence techniques on General Partners (GP) management company and key personnel

CAIA Level II is the official study guide for the Chartered Alternative Investment Analyst professional examination, and an authoritative guide to working in the alternative investment sphere. Written by the makers of the exam, this book provides in-depth guidance through the entire exam agenda. Topics include asset allocation and portfolio oversight, style analysis, risk management, alternative asset securitisation, secondary market creation, performance and style attribution and indexing and… Show more

CAIA Level II is the official study guide for the Chartered Alternative Investment Analyst professional examination, and an authoritative guide to working in the alternative investment sphere. Written by the makers of the exam, this book provides in-depth guidance through the entire exam agenda. Topics include asset allocation and portfolio oversight, style analysis, risk management, alternative asset securitisation, secondary market creation, performance and style attribution and indexing and benchmarking. Jason Scharfman contributed chapters 10 and 33 (private equity and hedge fund operational due diligence) Show less

An authoritative reference on governance, this book describes the essential tools needed for developing a flexible, comprehensive hedge fund governance analysis framework for investors. The book also outlines techniques for analyzing the hedge fund board of directors.

The book features exclusive interviews with hedge fund directors, industry leading legal practitioners and operational due diligence analysts. Hedge Fund Governance also equips investors to go beyond the board of directors… Show more

An authoritative reference on governance, this book describes the essential tools needed for developing a flexible, comprehensive hedge fund governance analysis framework for investors. The book also outlines techniques for analyzing the hedge fund board of directors.

The book features exclusive interviews with hedge fund directors, industry leading legal practitioners and operational due diligence analysts. Hedge Fund Governance also equips investors to go beyond the board of directors and standard governance, risk, and compliance (GRC) frameworks to analyze governance. Hands on approaches to review internal governance efforts at hedge funds and their service providers are featured.

Hedge Fund Governance provides a unique regulatory perspective on the current state of hedge fund governance. Interviews are included with the Malta Financial Services Authority and the Cayman Islands Monetary Authority (CIMA), including a discussion of the results of the Cayman Islands Hedge Fund Corporate Governance Survey and the CIMA Statement of Guidance for Regulated Mutual Funds.

Other Key Topics Covered Include:

•Methods for evaluating qualifications, conflicts of interests, fees, obligations and liabilities of a hedge fund's boards of directors
•Techniques for developing a hedge fund governance assessment program, including analyzing legal documentation and financial statements for governance related information
•Case studies of hedge fund governance successes and failures that explore investor governance rights and fund manager responsibilities including Weavering Capital, Madoff's UK operation and AIJ Japan
•Governance considerations when analyzing hedge fund valuation approaches
•Analysis of the role hedge fund service providers play such as administrators, prime brokers, law firms, compliance consultants and auditors in the governance process Show less

Contributed a chapter on Limited Partner (L.P.) private equity operational due diligence fund analysis techniques

Reconsidering Funds of Hedge Funds provides perspectives on the changing nature of the fund of hedge funds industry with a particular focus on the effects of the 2008 - 2012 financial crisis. Contributing to this book, Jason Scharfman's chapter is entitled Evaluating Trends in Fund of Hedge Funds Operational Due Diligence. The chapter outlines trends in fund of hedge funds various approaches towards operational due diligence, the effects of fraud on ODD and the increased use of ODD consultants… Show more

Reconsidering Funds of Hedge Funds provides perspectives on the changing nature of the fund of hedge funds industry with a particular focus on the effects of the 2008 - 2012 financial crisis. Contributing to this book, Jason Scharfman's chapter is entitled Evaluating Trends in Fund of Hedge Funds Operational Due Diligence. The chapter outlines trends in fund of hedge funds various approaches towards operational due diligence, the effects of fraud on ODD and the increased use of ODD consultants by fund of funds. Show less

Addressing the unique aspects and challenges associated with performing operational due diligence review of both private equity and real estate asset classes, this essential guide provides readers with the tools to develop a flexible comprehensive operational due diligence program for private equity and real estate. It includes techniques for analyzing fund legal documents and financial statements, as well as methods for evaluating operational risks concerning valuation methodologies, pricing… Show more

Addressing the unique aspects and challenges associated with performing operational due diligence review of both private equity and real estate asset classes, this essential guide provides readers with the tools to develop a flexible comprehensive operational due diligence program for private equity and real estate. It includes techniques for analyzing fund legal documents and financial statements, as well as methods for evaluating operational risks concerning valuation methodologies, pricing documentation and illiquidity concerns. Private Equity Operational Due Diligence: Tools to Evaluate Liquidity, Valuation and Documentation covers topics including fund legal documents and financial statement analysis techniques. Filled with case studies, this book is required reading for private equity and real estate investors, as well as fund managers and service providers, for performing due diligence on the noninvestment risks associated with private equity and real estate funds. This book also includes case studies in operational fraud and equips investors with the tools to evaluate liquidity, valuation, and documentation. A companion website to the book includes sample checklists, templates, spreadsheets, and links to laws and regulations referenced in the book. Show less

An analysis was conducted using a sample of over 275 global hedge fund allocators of the operational due diligence frameworks in place at these organizations. By developing an understanding of the operational due diligence structures in place, this paper establishes a transparent benchmark against which operational due diligence frameworks may be compared. The findings indicate there is a substantial variety present in the operational due diligence frameworks utilized by hedge fund allocators… Show more

An analysis was conducted using a sample of over 275 global hedge fund allocators of the operational due diligence frameworks in place at these organizations. By developing an understanding of the operational due diligence structures in place, this paper establishes a transparent benchmark against which operational due diligence frameworks may be compared. The findings indicate there is a substantial variety present in the operational due diligence frameworks utilized by hedge fund allocators, such as fund of hedge funds. On a global basis, a myriad of hybrid approaches are in place at smaller allocators. Regionally, while a dedicated approach to operational due diligence is generally favored, no one framework emerged as a clear global leader. As compared to smaller allocators, larger organizations seemed to have more resources dedicated specifically to operational due diligence. These findings are consistent with predictions that hedge fund allocators such as fund of hedge funds, in part driven by investor demand, will continue to allocate more resources to underlying hedge fund manager operational due diligence. Show less

With the various scandals taking place with hedge funds, now more than ever, both financial and operational risks must be examined. Revealing how to effectively detect and evaluate often-overlooked operational risk factors in hedge funds, such as multi-jurisdictional regulatory coordination, organizational nesting, and vaporware, Hedge Fund Operational Due Diligence includes real-world examples drawn from the author's experiences dealing with the operational risks of a global platform of hedge… Show more

With the various scandals taking place with hedge funds, now more than ever, both financial and operational risks must be examined. Revealing how to effectively detect and evaluate often-overlooked operational risk factors in hedge funds, such as multi-jurisdictional regulatory coordination, organizational nesting, and vaporware, Hedge Fund Operational Due Diligence includes real-world examples drawn from the author's experiences dealing with the operational risks of a global platform of hedge funds, funds of hedge funds, private equity, and real estate managers.
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