Recommended Reading List

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RESEARCH PAPERS (in reverse order of published date)

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• BOGLE, Bill, “2013 Survey Results – Hedge Fund Operational Due Diligence“, NEPC, LLC, November 2013

• BROWNE, Mark, “How Irish Regulated Hedge Funds can Help Eliminate AIJ-type Investment Scandals“, Mason Hayes & Curran, May 2012

• BROWN, et al, “Trust and Delegation”, NYU Working Paper Series, April 16, 2011

• KURDAS, Chidem, “Does Regulation Prevent Fraud? The Case of Manhattan Hedge Fund“, The Independent Review, v. 13, n. 3, Winter 2009

• “From Manhattan to Madoff: The Causes and Lessons of Hedge Fund Operational Failure“, Castle Hall Alternatives, 2009

• BOLLEN, et al, “Predicting Hedge Fund Fraud“, October 2009

• BROWN, et al, “Estimating Operational Risk for Hedge Funds: The ω-Score”, Yale ICF Working Paper No. 08-08, May 2008

• BROWN, et al, “Hedgge Fund Due Diligence: A Source of Alpha in a Hedge Fund Portfolio Strategy”, NYU Working Paper No. FIN-07-032, Jan 2008

• DESCHAINE, Benjamine, “A Good Fraud is Hard to Find“, Federal Street Advisors, 2008

• “Principles for the Valuation of Hedge Fund Portfolios“, International Organization of Securities Commissions, Nov 2007

• CAGAN, Penny, “Operational risk red flags: Lessons learned from ten hedge fund blow-ups”, Journal of Securities Operations & Custody, Sep 6, 2007

• “Understanding and Mitigating Operational Risk in Hedge Fund Investments“, The Capital Markets Company Ltd., Mar 2003

• “Hedge Funds, Leverage, and the Lessons of Long-Term Capital Management“, Report of The President’s Working Group on Financial Markets, Apr 1999

 

BOOKS (by last name)

 

LAWSON, Guy, “Octopus: Sam Israel, the Secret Market, and Wall Street’s Wildest Con”, Random House Digital, Inc., 2012

• The author did a good job to put this complicated story in a very readable way, based on interviews with Bayou’s Sam Israel and his intense research on this topic. The first part of this book, which describes how Sam Israel got into the mess, seems to be very close to the reality and helps you to understand psychology of fraudsters. You can make your own judgment whether Octopus really exists.

 

HOMM, Florian, “Rogue Financier: The Adventures of an Estranged Capitalist”, FinanzBuch Verlag, 2012

• This is a rare book written by a fraudster by himself (originally in German). I don’t know whether the story is true or not, it is still interesting to see his version of the episode (especially if you had a chance to meet him in person).

 

 JOHNSON, Bruce, “The Hedge Fund Fraud Casebook”, Wiley, 2010

• The author took an effort to work on a very comprehensive survey of hedge fund fraud including 100 chronological fraud cases. Impressive contents should be beneficial for those who wish to know the development of hedge fund fraud history.

 

SHAIN, Randy, “Hedge Fund Due Diligence”, John Wiley & Son, Inc., 2008

• An exceptional book, which explains very useful techniques and tools for background investigation. You will be worried if Shain can keep his business after sharing so many “secret recipes” of background checks.

 

SHARFMAN, Jason, “Hedge Fund Operational Due Diligence – Understanding the Risks”, John Wiley & Son, Inc., 2009

• Anyone who conducts operational due diligence should read this book and learn from Sharfman’s deep insights and rich experiences. The book lists many unique examples, which practitioners should face at some point of his or her career.  It also helps you to build a framework how to implement findings from operational due diligence into the final decision making.

 

BLOGS

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Due Diligence Review Corp (http://www.diligencereviewcorp.com/)

• A newly launched website (as of May 2011), which published an informative white paper on Form FP (“Form FP and Hedge Fund Investors“)

 

Teri Buhl’s Wall Street Unplugged: The News They left Out (http://www.teribuhl.com/)

• Teri is a Hercule Poirot in the hedge fund industry today, who chases bad actors one after another. She has a very unique and valuable network and information source to identify hedge fund frauds much earlier than most of investors realize they are in a big trouble.

 

 

OTHER WEBSITE

 

Greenwich Roundtable – Best Practices (www.greenwichroundtable.org/best-practices)

• Best Practices in Alternative Investing: Avoding Mistakes

• Best Practices in Alternative Investing: Managing Complexity

• Best Practices in Alternative Investing: Due Diligence

• Best Practices in Alternative Investing: Portfolio Construction

• Due Diligence for Global Macro and Managed Futures

• Due Diligence for Fixed Income and Credit Strategies

• Due Diligence for Equity Strategies

 

AIMA – Industry Guide

• Guide to Sound Practices for Hedge Fund Valuation (2007 version)

• Guide to Sound Practices for Hedge Fund Administration (2009 version, non-official link)

• Guide to Sound Practices for Business Continuity Management (2012 version)