THANK YOU to everyone who attended our Auxo Ignite event in Philadelphia on June 26th, hosted by Conduit Security, GRYPHON, and Shadmoor Advisors, Inc.
Attendees enjoyed great food, cocktails, networking, and a conversation on Evolving Cyber and Due Diligence Threats in financial services, led by industry experts Ryan Castle, Matt Hays, and Michael V. Merrigan.
Our expert panel discussed risks, and mitigants, throughout the investment lifecycle — from pre-investment diligence, to closing and funding the investment, to ongoing monitoring.
Key takeaways from the expert panel:
Wire Fraud:
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- Wire Fraud is not a cybersecurity problem to be solved by IT. It’s a financial controls problem that must be owned and solved by the finance team.
- Bad guys are faster at adapting new technology. AI is being deployed to conduct more convincing scams, and doing this at scale.
- Every wire fraud victim had good people and well-defined processes. If you’re not deploying a technical control to support the first two, then you’re at risk.
Business Intelligence & Background Investigations:
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- Ahead of any new investment, do your own diligence and background investigations. Don’t assume that other investors have thoroughly vetted the management team.
- Perform background investigations early in the diligence process, before you spend a lot of time and money on legal diligence and QofE. What is found in a manager’s background could derail a deal or call for a renegotiation of terms.
- It’s important to source independent references from those who have closely worked with a fund manager or management team. Don’t rely on references that were given to you by the manager, as they’ll most likely be overly positive.
Operational Due Diligence:
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- O.D.D. scope should include not only a thorough review prior to funding an investment, but also monitoring during the lifetime of the investment.
- The best way to define good O.D.D. is to have a process that is ‘defensible’ relative to scope, process, frequency, level of fiduciary duty, and budget.
- Working with a third-party O.D.D. specialist provides a variety of added benefits, including a broader range of manager intelligence and more objective guidance.