other information provided by the manager, for example discrepancies relating to operational issues such as the signatures required for fund transfer. The manager may report that the fund uses one procedure and the bank or broker may report that the fund uses another. The category indicates that 42% of the funds in our sample had either a Noted Verification Problem misrepresentation or an inconsistency problem. To further investigate the trustworthiness of these funds, we break these variables down further in Table II. indicates that in 16% of the cases, the fund’s version Signature Disagreement of the signature process did not match the version explained by the administrator, while Pricing indicates that 3.6% of the funds disagreed with the administrator on the process Disagreement used to price the portfolio. indicates that 11% of the funds switched a major Switched Vendor data vendor in the last 3 years, while means that 14% of the funds or the Refused DD Question administrator refused to answer DD company questions. <Insert Table II about here> In the wake of the Madoff scandal, verifying performance and existence of assets has taken on greater importance. Surprisingly, nearly 19% of funds’ asset information either could not be verified independently (Assets or the DD firm found a disagreement between Disagree) the fund’s reported assets and evidence from an alternative source (Can’t Similar Verify Assets). discrepancies (Performance or verification problems (Can’t with Disagree) Verify Performance) respect to reported performance were noted for 14% of DD investigations. The DD firm also found that 20% of managers (Bad interviewed verbally stated incorrect information to the Recall)
other information provided by the manager, for example discrepancies relating to operational issues such as the signatures required for fund transfer. The manager may report that the fund uses one procedure and the bank or broker may report that the fund uses another. The category Noted Verification Problem indicates that 42% of the funds in our sample had either a misrepresentation or an inconsistency problem. To further investigate the trustworthiness of these funds, we break these variables down further in Table II. Signature Disagreement indicates that in 16% of the cases, the fund’s version of the signature process did not match the version explained by the administrator, while Pricing Disagreement indicates that 3.6% of the funds disagreed with the administrator on the process used to price the portfolio. Switched Vendor indicates that 11% of the funds switched a major data vendor in the last 3 years, while Refused DD Question means that 14% of the funds or the administrator refused to answer DD company questions. <Insert Table II about here> In the wake of the Madoff scandal, verifying performance and existence of assets has taken on greater importance. Surprisingly, nearly 19% of funds’ asset information either could not be verified independently (Assets Disagree) or the DD firm found a disagreement between the fund’s reported assets and evidence from an alternative source (Can’t Verify Assets). Similar discrepancies (Performance Disagree) or verification problems (Can’t Verify Performance) with respect to reported performance were noted for 14% of DD investigations. The DD firm also found that 20% of managers (Bad Recall) interviewed verbally stated incorrect information to the