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07/31/08 – Die Global Zocker
Zeit Online
06/26/08 – Investigator found many questions in Israel’s background
The Journal News
06/25/08 – SageCrest Principals' Past Should Have Raised Red Flags
Dow Jones Newswires
Excerpt:
“For most people, they would be at least alarmed enough to ask the question of 'what happened?',” said Randy Shain, New York-based vice president of First Advantage Investigative Services, which investigates hedge funds for would-be investors.
06/20/08 – Hedge fund arrests send chill through industry
Reuters.com
06/13/08 – Probe deepens in missing hedge fund manager
Reuters.com
04/30/08 – Books: What to Ask a Hedge Fund
HedgeFund.net
Excerpt:
“As Shain puts it, ‘the idea that people willing to exaggerate, obfuscate, or just outright lie about 'unimportant' items in their history would then be completely forthright when faced with a potentially devastating blow to their business is simply ridiculous.'”
04/14/08 – Hedge Fund Gumshoe
Hedge Funds Review (blog)
03/31/08 – New Hedge Fund Book Tackles Due Diligence
FUNDfire.com
Excerpt:
“The amount of money flowing into and held by hedge funds combined with a clear desire to understand the risks of investing in or doing business with hedge funds [make the book a worthwhile read],” says Shain. “The very public reporting of hedge funds that fail, make it prudent for the target institutions to peruse this book.”
03/27/08 – Hedge Fund Sleuth Goes for Psychology
HedgeWorld.com
Excerpt:
Randy Shain: “It's rare that one finds something egregious like fraud. A fair number of interviews don't provide a black-and-white picture. Most of what you learn is pretty positive but the person interviewed may point to one or two things the manager might have done differently. People will tell you things that they think of as positive but become a liability in a certain context. Suppose you're told a manager is a great trader and a very honest man but a terrible marketer. If he's going to do marketing for the new fund and you invest, you could be the only investor!”
02/18/08 – I-Spy Hedge Fund Managers
IDDmagazine.com
02/18/08 – …and tips from hedge fund gumshoe
Pensions & Investments / PIonline.com
11/12/07 – Check the Firm Out to Avoid Disaster
Financial Times
Excerpt:
“Most of what we focus on is in the public record,“ says Mr. Shain. “The macro issue here is ‘pattern of behaviour’. In isolation, a single blemish may be of no concern, but when we find couplings of events, clients may start to raise flags.”
09/07 – Operational Risk/Due Diligence
Hedge Funds Review
07/07 – The Takeover
Absolute Return
Excerpt:
“As hedge fund private eye Randy Shain would discover in backgrounding Durus for clients of his BackTrack Reports, Sacane had invented at least one detail in his early marketing documents - that he had graduated from the University of Colorado, where he studied molecular, cellular and developmental biology. Instead, he just attended classes there over a six-year period. But for the most part, his resume was viewed as the right kind of training, done in the right order.”
07/07 – Holidays See Forensics Teams at Work
Global Investor Magazine
Excerpted quote from First Advantage’s Randy Shain:
“We find that if there was ever any CV manipulation, they tend to do the same later on a grander scale. It's a character trait, and character traits get magnified in difficult circumstances. Everyone has losses. That is the nature of investing. But long-term success depends on how you handle it, how you respond to pressure. You can't get away from who you are.”
06/07 – Growing a Hedge Fund
Worth Magazine
Excerpt:
“I wouldn’t be giving my money to Madeleine Albright unless I knew who was trading,” says Randy Shain, a vice president with First Advantage in New York who has helped oversee investigations into the backgrounds of 2,500 hedge funds and 4,500 managers on behalf of prospective investors. “The real issue is that she has no qualifications. Obviously someone else is doing the trading; who is that someone else? That someone else has nothing to do with her history,” he says. “You still need to check that person just as rigorously as you would someone else. The fact that she’s put her stamp on that person means nothing to me.”
05/01/07 – Top-paid hedge fund managers join billion dollar club after big year on Wall Street
Associated Press
Excerpt:
“The reason that people make as much as they do is because they're making so much for the institutions that they're working for,” said Randy Shain, vice president at First Advantage Investigative Services, which creates reports for hedge funds and other investors on the backgrounds of hedge fund managers. He contends the results of these managers justify the pay. “It's not as if someone's losing because someone else is winning,” Shain said. “I would argue that what they make is not obscene at all. ... These people wouldn't be making all of this money if you didn't have pension funds and funds of funds that were giving them all this money,” he said.
03/07 – First Advantage Setting Up in Asia
Asia Hedge
Summary:
First Advantage Investigative Services has expanded its scope of services to meet the growing demand for in-depth, due diligence reports on hedge fund managers in Asia. To deliver its Backtrack Report, an independent background due diligence report, on Asian funds, the company has tapped into the resources of its parent company to utilize existing operations and human resources in Tokyo.
11/06 – Hedging Against Disaster
Worth Magazine
Excerpt:
"First Advantage investigators found one lawyer turned hedge fund manager that not only had been disbarred, but his business partner faced an undisclosed seven figure legal judgment, according to Randy Shain, a vice president at the firm. "With hedge funds, this type of information is not a secret. You can identify these red flags if you just pay attention," Shain adds."
10/06 – Sizing Up The Target's Top Managers
Mergers & Acquisitions: The Dealmaker's Journal
Excerpt:
"A private equity investor, for instance, might not hold a bankruptcy against an entrepreneur since numerous entrepreneurs have business failures under their belts, notes Randy Shain, co-founder of investigative firm First Advantage Investigative Services. But a hedge fund manager who has been in bankruptcy is another story. "If he can't manage his own money you really have to question whether he can manage investors' money, "says Shain, whose firm probed Wood River for some potential investors."
09/08/06 – BackTrack's growth mirrors hedge fund industry
Absolute Return Weekly
Excerpt:
"This year, BackTrack has increased its staff to 50 employees from 35 in 2005 to deal with the increased workflow. BackTrack was hired to complete roughly 1,750 reports in 2005 and is on target to complete more than 1,900 this year, an increase in excess of 11%, says Randy Shain, BackTrack CEO. A similar increase is expected for 2007."
09/06 - Due Diligence Primer
The Substantial Investor
08/30/06 – Liberty Bank Building Welcomes Newest Tenant
PopCityMedia.com
08/25/06 – A Private Eye for Investors
New York Times
04/24/06 – City invested in failed hedge fund
DFW – Star Telegram
Excerpt:
“BackTrack's co-founder, Randy Shain, said the company had first spotted red flags with Bayou in the fall of 2001. It discovered that Israel's résumé falsely stated that he had been a head trader at another firm for four years. "The issue there was dual: Both that he did not have the experience he suggested he did, which is bad enough, and he was a liar," Shain said.
The lawsuit was the deal-breaker, though, Shain said. With hedge-fund managers, "you don't see whistle-blower suits that often. ... It was startling," he said. "Most people would have been scared off by that, as well they should have been."
04/23/06 – Fort Worth invested $6 million in failed hedge fund, records show
www.Star-Telegram.com
03/06/06 – Find the Hedge Fund Winners: Business News with Howard Green
Report on Business Television
02/25/06 – Wanted: Fund Manager, No Experience Necessary
BusinessWeek
Excerpt:
"The 'hotness' of this field certainly has attracted people whose pedigrees [suggest they are at] greater risk to fail than those who have, say, served a more typical apprenticeship at a large hedge fund," says Randy Shain. He's vice-president of First Advantage Corp. ( FADV ), producer of the BackTrack Reports , which conducts background checks on fund managers. Over the past five years, Shain says, his staff has seen "an Olympic gold medalist, some former military folks, several ex-professional football players, and a professional arcade-game player."
02/13/06 – Teufelskerle der Wall Street
Die Zeit
Excerpt (translated from German):
"Those are hardly individual cases, Randy Shain's experience has shown. Shain runs BackTrack, a firm that specializes in analyzing the personal records of hedge fund managers on behalf of investors. “Some candidates lie about the little things: they give false University degrees or fail to mention lawsuits,” says the private investigator.”
02/01/06 – Government catches up with hedge funds
CNN Money
Excerpt:
“Randy Shain, executive vice president of investigative due diligence firm First Advantage CoreFacts, which publishes BackTrack Reports, said that while he doesn't think hedge fund registration is a terrible idea, he doesn't feel it will ferret out fraud.
"When I look at industries that are heavily regulated, I see no correlation between them and the prevention of fraud," he said. "Look at broker/dealers – they're heavily regulated and yet they've given us the biggest boiler rooms. Why would this be different?"
12/20/05 – Hedge Funds: More Money, More Problems
CNN Money
Excerpt:
“I just don't know what they are going to do otherwise to catch up. If people start to see how bad of shape they're in -- and you can't just invest in bonds to catch up -- investing in hedge funds (will be viewed) as a real strategy," said Randy Shain, executive vice president of investigative due diligence firm First Advantage CoreFacts, which publishes BackTrack Reports. “
12/12/05 – We Wuz Robbed!
Forbes.com
Excerpt:
“Randy Shain of First Advantage CoreFacts, which investigates money managers for institutional investors, punctured that myth with a single phone call to Cooperman in 2001. "The fact that he got any money in the beginning is hard to believe," says Shain.”
11/21/05 – Hedge Fund Sleuths
Business Week
Excerpt:
“The warning signs that Bayou and Wood River clients missed offer lessons for other investors -- many of whom rely heavily on personal recommendations when selecting funds in this clubby world. Among the most important: Verify the manager's credentials and the fund's claims, says Randy Shain, executive vice-president at First Advantage CoreFacts' (FADV) New York-based investigative unit, which conducts background checks, known as the BackTrack Report.”
11/14/05 – Tracking the slime
Alternative Universe
Excerpt:
“We looked at Wood River in June,” Cadigan says. “We found a lawsuit in which Wood River was sued for defaulting on its lease.” According to the suit, the firm failed to pay rent from June to August of 2002. What’s more, Back- Track uncovered a series of tax liens issued against Wood River’s managing partner, John Whittier, from 2002 through 2004. They included a lien from the State of California for $54,000 and a separate lien from the State of Idaho for $86,000.
According to Cadigan, a single financial issue might not be enough to deter investors. After all, funds sometimes do have down months. Still, he says, firms have to pay their rent and their taxes. “Added all together, you would have to ask yourself, ‘Why is the person I’m thinking about having manage my money apparently unable to manage his own money?’,” Cadigan says.”
10/31/05 – Performance drop as Fund of Funds mature
Financial Times Mandate
Excerpt:
"Fund of funds still serve an extremely important function and, unless pension funds are going to take over the function of fund of funds, I don't understand why they wouldn’t continue with that model," says Randy Shain, co-founder of due diligence specialist firm [First Advantage CoreFacts] Backtrack Reports. Mr Shain explains that FoHFs perform an extremely important task that consists in firstly meeting and speaking to potential managers and doing all the operational due diligence and "trying to figure out whether the manager's story makes any sense."
"The second thing they do is to hire people like us to look at those running the companies because that's something they don't do that well as we can," he says. "The idea is that the research they've done on the operational side combined with the people side, which is what we do, will allow them to do a much better job than any individual investor could ever do."
10/20/05 – Wood River’s Founder: A Rich Novice?
Business Week
Excerpt:
"First Advantage CoreFacts, a New York research firm that vetted Wood River for potential investors last year, concluded that Whittier left DLJ on good terms. "We talked to someone who was effectively his boss at DLJ who liked him," says Randy Shain, executive vice-president at First Advantage. "And we talked to another colleague at DLJ who liked him and said they would work with him again."
10/13/05 – Another Fishy Hedge Fund
Business Week
Excerpt:
"In October, 2002, Wood River 's landlord in San Francisco sued the firm for failing to pay rent for three months. That suit was dismissed. And from 2002 through 2004, the state of Idaho filed four tax liens against Whittier totaling $267,156. It couldn't be determined how those liens were resolved. "Those things in concert really made us feel ill at ease," says Randy Shain, executive vice-president at First Advantage CoreFacts, a New York research firm that vetted Wood River for two potential investors this summer. Shain urged his clients to steer clear."
10/12/05 – Scandalsmake hedge fund sleuthing pay off-experts
Reuters
Excerpt:
“For fees ranging between $2,000 and $50,000, firms will compile dossiers that can turn up anything from unpaid parking tickets to lawsuits to lies on resumes.
"Getting reports on managers shows that for $2,000 up front, you can avoid people like this instead of having to spend hundreds of times that amount to recoup millions of dollars in losses later," said Randy Shain, executive vice president of First Advantage CoreFacts LLC, which investigates hedge funds.
"It is cheap insurance," he added. “Taken together, these three things added up to a red flag," Shain said, explaining that "the report shows Whittier ran out of money or that he's sloppy. Neither inspires confidence."
Fact checking also turned up discrepancies on Bayou founder Samuel Israel's resume when Shain's analysts tracked down the hedge fund manager's former employer, Leon Cooperman, who said he hadn't been head trader and wasn't there for four years .
"We were able to discover that Bayou's auditor was bullshit," Shain said.”
10/12/05 – Lack Of Response To Wood River Draws Questions
Wall Street Journal
Excerpt:
"Separately, the [allegations about] tax liens, failure to pay rent and CSFB suit are yellow flags," says Randy Shain, executive vice president of First Advantage CoreFacts LLC, which investigates hedge funds. "Together they're red flags."
09/29/05 – What happened at Bayou
CNNMoney
Excerpt:
“Randy Shain, co-founder of the investigative firm First Advantage CoreFacts, said his firm investigated Bayou on behalf of clients who were considering investing in it. The firm, formerly known as BackTrack Reports, first looked into Bayou in 2001.
"I always thought this was a person I wouldn't do business with (but) I wouldn't have thought he was a total crook," he said, noting, though, that there were red flags in Israel's background.
"The trick here is you had a guy who was purportedly producing these nice returns. The accounting thing is hard to overlook," he said, referring to the creation of the bogus accounting firm. Most institutional investors demand audited returns from hedge funds and look for a well-known auditor's name on the work.””
09/25/05 – Hedge Funds: Alpha decays with age
Euromoney
Excerpt:
"The professionalism in the industry is increasing. Compliance officers are being brought in and staff hired. Maybe if you're a hedge fund running $100 million you can manage with two people and an assistant. But if you have a great year and get up to $600 million, you're now going to have to manage people – not just money," says Randy Shain, executive vice-president of due-diligence company First Advantage CoreFacts.
"And some individuals just aren't good at managing people. Hedge funds that want to grow need a structure that allows them to do so. It's about how to build a team and reward people."
09/24/05 – Watch for danger behind the hedge
Financial Review
Excerpt:
“Randy Shain, the co-founder of BackTrack Reports, which researches hedge funds for institutions and some wealthy individuals, says that in the Bayou case, several red flags - including questions about Israel's character - would not have been evident to people contemplating an investment in the fund.”
09/12/05 – Want a Hedge Fund? Here’s Your Homework
HeraldTribune.com
Excerpt:
“The problem for individual investors is that many of them "have made a lot of money doing something else," Mr. Shain said. "They have a false sense of security about their own sophistication in analyzing financials," he added.”
09/12/05 – Want a Hedge Fund? Here’s Your Homework
New York Times
Excerpt:
"Randy Shain, the co-founder of BackTrack Reports, which researches hedge funds for institutions and some wealthy individuals, says that in the Bayou case, several red flags - including questions about Mr. Israel's character - would not have been evident to people contemplating an investment in the fund. For example, it would have been difficult to learn from publicly available data that Mr. Israel had exaggerated his position at one hedge fund, had been charged with drunken driving and had been accused in a lawsuit by a former employee of violating securities regulations."
09/05/05 – Bayou bust puts onus on investors’ due diligence Pensions and Investments
Excerpt:
“It is very rare for institutional investors, like hedge funds of funds, to be involved in a hedge fund fraud. They do a much better job of due diligence than high-net-worth investors, for example. Institutions know that the ‘people due diligence' is so important, so essential to competent due diligence,'' said Randy Shain.”
09/01/05 – Seeing in the Dark
TheStreet.com
Excerpt:
“I know this is a biased, self-serving statement, but I don't think funds of funds are equipped to do people due diligence on their own," says Randy Shain, executive vice president of BackTrack Reports Group, an intelligence division of First Advantage and a company that specializes in conducting investigative work for several dozen funds of funds."
08/08/05 – Hedge Fund Spies: WSJ Reporter Jane Kim (11:40 a.m. ET) CNBC Click here to play Low Res | High Res
08/08/05 – Diggin for Hedge-Fund Dirt
Wall Street Journal
Excerpt:
“It is very rare for institutional investors, like hedge funds of funds, to be involved in a hedge fund fraud. They do a much better job of due diligence than high-net-worth investors, for example. Institutions know that the ‘people due diligence' is so important, so essential to competent due diligence,'' said Randy Shain.
"Unlike your friends, who you want to be Renaissance men, in a hedge-fund manager you're looking for the guy that doesn't have a personality," says Randy Shain, executive vice president at First Advantage Corp's First Advantage CoreFacts LLC investigative unit, which produces BackTrack Reports."People who have spent a lot of time doing a lot of other things, like auto racing, means that they're away from a computer screen."
07/05 – Fighting Fund Fraud
IPE.com
Excerpt:
Randy Shain appears in an article cautioning against over-reliance on "stale and static" due diligence questionnaires and prospective government regulators, neither of which is likely to address possible operational hedge fund risk.
05/05 – Rolling the Dice on Hedge Funds
Business 2.0
Instructing readers on how to go about making their initial investment in a hedge fund, Business 2.0 calls BackTrack's pre-investment due diligence "money well spent."
03/05 – Not on the Short List
Barron’s
Barron's notes the small number of mutual fund managers successfully transitioning to hedge funds, with BackTrack co-founder Randy Shain offering his thoughts on why this is so.
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