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Due Diligence Matters - October 2025

perfORM is an award-winning, international (UK, Switzerland, USA and UAE) and standalone Operational Due Diligence solutions provider with 150+ years of collective ODD experience. Over 300 operational due diligence reviews have been completed since the start of 2023.

The ‘ORM’ in perfORM stands for Operational Risk Mitigation. Please contact us if you would like to discuss our services, or to receive sample ODD Reports, thank you. 

Venture & growth capital in Europe – mapping pension funds’ attitudes

Earlier this month we were invited to the European Commission in Brussels to attend a roundtable on pensions investment in venture capital in Europe. The recent report developed by Pensions for Purpose and commissioned by European Women in VC (EWVC) & Venture Connections states that just 0.12% of the €3tn in assets managed in pension funds across Europe is allocated to VC. The roundtable brought pension managers, VC managers and other stakeholders together to discuss the reasons for this. In total, 22 EU nationalities were represented, as well as participants from several associated countries, including the UK, Norway, and Iceland

It turned out that the reasons are many and varied, ranging from local regulators not permitting investment by pension funds in any form of alternative asset, to capacity and liquidity issues. It was noted that one solution to reduce friction and time taken to invest is to allocate via VC funds or funds of VC funds. This approach allows for greater diversification and is less resource-intensive, as due diligence need only be performed at the manager level, not the founder level. perfORM is well-placed to carry out operational due diligence at the manager level, having worked extensively in the VC space in the last few years. We understand the operational risks arising from such investments – please see our August e-bulletin for further detail.

The EWVC is a pan-European community of senior women investors seeking to accelerate capital formation while strengthening the industry’s diversity and performance outcomes. The network has spent the past two years combining advocacy with research.

GAIM Ops West

350 attendees descended on Monarch Beach, Orange County, California to principally discuss AI, US government policy impact on regulation, market trends and experience deep fake demo.

The ongoing sophistication of Deep-fake cyber attacks

What is it?

AI-generated, realistic-looking fake videos used to simulate/emulate real people and acquire their authority to do something. E.g. bypass remote biometric security controls to commit wire transfer fraud, email compromise and take-over accounts. 

It is not new, what’s changed?

In 2025 there are now hyper realistic ‘avatar’ agents that acquire 3D characteristics including not just pre-recorded speech but real-time conversations that respond to questions. Extremely hard to detect. As a result, KYC fraud is on the rise.

What is a reasonable defense measure?

From the list that was discussed, we highlight:

  • Train staff;
  • Configure a secure PIN with mobile/cellular carriers to prevent SIM swapping attacks; and
  • Deploy phishing resistant multi-factor authentication.

Quote: “it only takes one photo and about 10 seconds of a recorded voice to create a deep-fake clone”

Regulation and impact on ODD

What’s changed?

  • PFAR (quarterly SEC reporting) dropped (for now!!) Spirit of PFAR has NOT gone away.
  • 20+ rule changes were coming. Now 1!!
  • Enforcement rule making still present.
  • Compliance teams are consolidating policies rather than preparing for new rules.

AI Reflections

  • The feeling was that AI is, for most of us, about improving efficiencies in data management, searches, K1’s, tax reporting rather than turning front office or back-office processes upside down.
  • AI is not PLUG N PLAY! Users need an educational tool otherwise low adoption and/or outputs are sub-standard.
  • Like all technology implementations, AI takes a lot longer and can cost a lot more than budgeted.
  • Regulatory guidance needed on how and what to disclose to investors. 

Quote: “My CIO says he knows the words PAIN and FAIL and both contain AI”

SEC view on AI usage

  • AI use must be explainable, auditable and overseen.

SEC Exam 101

Despite the SEC representative unable to attend due to the US government shutdown….

3 reasons for Exams:

  1. Routine ‘periodical’.

  2. Cause ‘something has come to their attention about you’.

  3. Sweep ‘learn about something new, e.g. digital assets.

What first happens in an exam

  1. Documentation request – respond very quickly and correctly!! Sets the tone/first impressions.

  2. Appoint a person who is the single point of contact (not multiple people).

  3. Senior management are often the first to be deposed.

  4. ‘Know your Breaches’ and be ready to talk the examiner through it.

  5. Ensure your breach log is available… and not empty!

SEC exam targets

  1. Real crime offenders.

  2. Will no longer deploy previous Administration’s aggressive tactics to go after technical violations/breaches.

  3. More selective enforcement. No longer about enforcement numbers as a KPI.

  4. Enforcement matters into Off-channel communications significantly down under the new SEC chair.

SEC Morale 

DOGE injected fear into staff. Post DOGE, SEC headcount is down about 15%, and specifically enforcement staff are down a similar amount.

And finally…

The digital assets industry looks forward to the CLARITY Act that is waiting Senate approval and will establish a federal regulatory framework for digital assets by clarifying the jurisdictional reach of both the SEC and CFTC.

 

ODD Report Solution

Our 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

 

Investment Manager: Redhedge Asset Management, LLP – please contact here to request access to our July 2025 dated ODD Report.

Investment Manager: Hyperion Decimus, LLC – please contact here to request access to our June 2025 dated ODD Report.

Investment Manager: MNNC Advisors (Cayman) SEZC – please contact here to request access to our June 2025 dated ODD Report.

Investment Manager: GrandLine Investment Management Ltd – please contact here to request access to our March 2025 dated ODD Report

Investment Manager: Spectra Capital, LLC – please contact here to request access to our March 2025 dated ODD Report

Investment Manager: Gemcorp Capital Management Limited – please contact here to request access to our January and March 2025 dated ODD Reports

Investment Manager: Hivemind Capital Partners UK LLP – please contact here to request access to our January and April 2025 dated ODD Reports

Investment Manager: MARK Capital Management LP – please contact here to request access to our December 2024 dated ODD Report

Investment Manager: 24 Capital Management Ltd – please contact here to request access to our December 2024 dated ODD Report

Investment Manager: Edge Capital Investment Management, LLC – please contact here to request access to our September 2024 dated ODD Report. UNDERGOING ANNUAL RENEWAL PROCESS

Investment Manager: Fasanara Capital Limited – please contact here to request access to our July 2024 dated ODD Report

Investment Manager: Eltican Asset Management SAS – please contact here to request access to our July 2024 dated ODD Report

Digital Asset Service Provider: Copper Technologies (Switzerland) AG – please contact here to request access to our April 2024 dated ODD Report. UNDERGOING ANNUAL RENEWAL PROCESS

Investment Manager: Coral Cove Capital Ltd – please contact here to request access to our January 2024 dated ODD Report