Doesn't anyone do due diligence anymore?
01/12/2022
These days, it is hard to know what due diligence means – look at these recent investment failures into FTX
- Ontario Teachers' Pension Plan, which put $95mn into FTX, insists that its professionals "conduct robust due diligence on all private investments".
- Tiger Global tossed in $38mn and paid outside consultants, including Bain & Co, to do the work.
- Sequoia Capital, handed FTX founder Sam Bankman-Fried $214mn even though he played video games during his pitch to them, has walked a fine line.
All the above missed what FTX's new chief has described as a "complete failure of corporate controls".
What would DD could have found in a review
Due Diligence Review Area | Pass / Fail | What Due Diligence Would Have Found |
Officers and Principles | Fail | No track record (you could argue that no one has a track record here, but then everything else needs a careful review). |
Organizational Structure | Fail | Conflicts exist between sister companies having the same ownership (Alameda was FTX's biggest client). |
Compliance Structure | Fail | Certainly not enough with the right oversight. |
Conflicts | Fail | Too many to count. |
Custody | Fail | Client assets were moved to its sister firm. |
Valuation | Fail | FTT was basically an in-house cryptocurrency with no real market value. |
Read the source articles here……
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As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email info@comsuregroup.com.