The post SEC Sweep into Marketing Rule Violations – Charges Against Nine Investment Advisers appeared first on Convergence.

The Convergence annual study of operational complexity and risk across the private fund industry produced some insightful findings – the complexity scores of “Institutional” Managers with assets exceeding $1B, $5B, and even >$25B increased in no fewer than 33% and as many as 50% of managers across these size cohorts over the most recent one-, three-,  and five-year periods.

Investment managers across the size spectrum are constantly evolving, pursuing new strategies, adding new clients, and expanding into new markets, all aimed at generating differentiated returns and growing their business – with this context, it isn’t surprising that the corresponding business complexity is increasing. It was surprising however that 11.3%, 10.1%, and 6.1% of the increase in their Total Complexity Score over the most recent one-year period. The increases in risk for this group of 436 institutional investment managers represents a set of outliers with meaningful consequences to their investors and service providers – a level of change that is unlikely to be fully appreciated and merits further diligence to understand what is driving these changes, and to understand how increasing levels of risk are being managed.

A bit more than 58% of ~19,000 SEC-RIAs in Convergence’s database disclose advising unregistered private Funds – a mix of nearly 11,000 Exempt and Non-Exempt Private Fund filing advisers. RIAs to private funds are increasingly adding assets by advising investment companies (mutual funds), SMAs, sub-advising funds, and participating in wrap-fee programs. There has been a very public push by alternative investment firms attempting to #democratizeinvesting by adding high net worth and individual investors. All this change means one thing for sure – greater organizational complexity and operational risk! 

Convergence measures and scores the complexity and risk within an investment manager’s business across four non-investment dimensions using dozens of proprietary risk factors. We analyze these changes across size bands, strategies, and factors to identify patterns, trends, and inconsistencies across the industry and to provide our clients with actionable, proprietary “insights” about the changes, their meaning, and the conversations they can have with their investment managers to become comfortable that the risk is being managed.

If you are a pension plan, fund of funds, or family office that invests in the private funds or SMAs of RIAs please contact David Etzbach to discover and evaluate how changes in the complexity of your portfolio of managers can best be managed.

The post Change Happens… and Operational Complexity Increases appeared first on Convergence.

Convergence called Mr. Emory L. Lowe, the President/CEO of Lowe Equity Partners for comment.  Mr. Lowe declined to provide us with color on this enormous accomplishment, other than to say, “It is not an error.” While we do not doubt Mr. Lowe, we are pretty certain that his filings contain errors.

Convergence calls firms when we identify “data anomalies” within and across their various regulatory filings. We attempt to seek confirmation before using the data in our analytics.  Please respond if we call you so that we validate these numbers because we do publish them. We have pointed out many such data issues to advisers who have quickly filed a correcting amendment to avoid embarrassing errors and keep our data clean from such anomalies.  While Mr. Lowe represented that the data in his Form D filings are correct, we removed it from our databases for the following reasons:

1. The reported amount sold of $999,999,975,000 would be the largest hedge fund in the history of hedge fund offerings!
2. Lowe Equity Partners will become 20 times bigger than the world’s largest hedge funds run by Millenium, Citadel, and Bridgewater!
3. The amount and pacing of the incremental capital raised set a record for fundraising and he did not disclose paying a selling or broker commission to raise it!
4. We were unable to verify and validate Mr. Lowe and Lowe Equity Partners’ expertise in raising capital and/or running a hedge fund of this size.

Moral of the Story

We encourage investors, service providers, investment advisers, and regulators to speak with us and learn about how they can benefit from the way that we leverage our unique combination of technology, data science, and subject matter experts to study, interpret and tell stories based on regulatory filings. Please contact John Phinney for more information or Request a Demo. 

The post Convergence Insight – Lowe Equity Partners LLC, CIK #0001976866 appeared first on Convergence.

The post The Archegos financial fiasco appeared first on Convergence.

The post Bernie Madoff Form ADV appeared first on Convergence.

The post Operations Due Diligence Effectiveness – Survey Report appeared first on Convergence.

The post Operating Risk Factor – Financial Industry Affiliates appeared first on Convergence.

The post Operating Risk Factor – Conflicts of Interest appeared first on Convergence.

The post Operating Risk Factor – Multiple Compensation Arrangements appeared first on Convergence.

The post Operating Risk Factor – Multiple Advisory Services appeared first on Convergence.

The post Operating Risk Factor – Multi-Functional C-Suite appeared first on Convergence.

The post Reducing your Chances of Being Victimized by Bad Behavior- Recognizing Red-Flags and Risk in an Asset Manager’s Business appeared first on Convergence.