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Due Diligence Matters - May 2026 Bulletin

About perfORM: Operational Due Diligence Specialists for Investment Managers,  Allocators and Service Providers

perfORM is an award-winning, internationally operating due diligence firm, with presence across the UK, Switzerland, USA, and UAE. We are a standalone ODD solutions provider with 150+ years of collective ODD experience. 

The ‘ORM’ in perfORM stands for Operational Risk Mitigation. 

We serve a global and diverse client base, including: 

  • Investment managers seeking validation of their operational controls
  • Allocators – family offices, multi-family offices, private banks, wealth managers, funds of funds, asset managers, pension funds, endowments, and foundations – requiring robust third-party operational due diligence on their manager relationships
  • Third-party service providers and, sports teams

GAIM Ops Cayman Reflections

This year marks the 20th anniversary of GAIM Ops Cayman. Over the past two decades, the event has established itself as a major presence in the alternative due diligence industry. It attracts not only managers and their C-level operations staff but also investors who send their operational due diligence professionals. GAIM Ops Cayman continues to play an influential role in shaping best practices and facilitates a kind of 4 day ‘offsite’ for professionals to discuss critical trends.

Our very own Co-Founder and Co-Head, James Newman, met with a number of delegates and speakers. He came back with the following observations:

  • Technology solutions from back to middle office play an ever-increasing role in businesses’ operational infrastructure leading to a considerable number of service provider attendees. If you want to explore service provider operations, you could do worse attending this event.
  • The integration of artificial intelligence is significantly influencing business operations, including investor relations teams, many of which leverage AI to efficiently complete investor questionnaires. This has led to concern over whether responses are accurate. Will this lead to a return to onsite due diligence visits?
  • Speaking of AI, everyone was talking about concerns about governance. For investors AI provides opportunities to collate and compute data more efficiently. The risk, however, is that it may take analysis and control away from the human analyst, lead to short cuts in rigour and analysis and ultimately decrease the reliability of due diligence conclusions. Will pensions, endowments and other fiduciaries increasingly rely on and trust AI in due diligence? Where will these owners of capital draw the line between AI analysis and human analysis?

Getting back to ODD basics and the continued spectre of fraud in today’s world

Mars FX, a systematic FX/gold arbitrage hedge fund founded by David Choi, collapsed in March 2026 after an alleged $600m fraud was exposed. This is significant event for a few reasons, not least the size of the loss and the longevity of the fund, which had been accepting external capital for nearly six years. 

Aside from conspicuous steady, uniform positive returns year on year, the fund, and its California-based manager, Novus Capital Partners, looked convincing – credible executives, Deloitte as fund auditor, 500+ professional investors, etc. When an investment manager appears legitimate the bar for completing thorough operational due diligence can drop, resulting in missed warning signs.

A thorough operational due diligence review should have identified several red flags, including:

  • Lack of NAV verification – the Fund’s administrator is a key resource to obtain the NAV from independently. This should be compared to fund fact sheets/statements, with any differences queried. As part of the current legal proceedings Novus has alleged that Mars FX’s assets were held with TRFX, (although it never shared TRFX’s name previously, apparently stating that the arrangement was “proprietary and sensitive”). In response TRFX claimed its trading platform had stopped operating in 2022—two full years before Mars FX was still actively raising capital from new investors. So a question is where were the assets held? Operational due diligence prior to investing would have sought this information as a key component to signing off any subscription into the fund. 
  • Lack of SEC registration – it is unclear how the manager avoided registration, given the size of the fund.
  • Counterparty verification – review the status of all counterparties where possible through local regulatory registries like the BVI Financial Services Commission.
  • No independent directors – according to Cayman Islands General Registry data, the fund did not have independent fund directors and therefore lacked independent challenge and oversight.
  • Background checks – deep-dive background checks would have put any questionable counterparties under the microscope. It is reported there was a  spousal ownership which can add conflicts of interest around governance and decision-making.

The five considerations above are synonymous with thorough operational due diligence reviews and are always part of a rigorous investment and operational due diligence process. Stay safe out there!

 

perfORM’s ODD Report Solution: Operational Due diligence for Investment Managers and Allocators 

perfORM’s ODD Report Solution is not just another tick in a box, it is a fast growing and innovative approach to operational due diligence. A pragmatic solution for investment managers and service providers which engage us to complete an ODD review.

“We believe in operational excellence, doing things ‘the right way’ and holding ourselves accountable for delivering institutional-grade asset management. Working with perfORM to review our processes thoroughly is key to ensuring our investors have independent insight, understanding, and confidence in how we manage their assets. We appreciate the perfORM team’s forensic review of our documentation and processes and look forward to collaborating again” – Investment Manager ODD Report Solution client

Contact perfORM to discuss ODD support or to receive a sample ODD report.

You can also read our April bulletin edition and watch our new video which introduces perfORM and each of our of core ODD services.

ODD Report Solution Clients