Convergence Inc

SS&C Technologies To Acquire Battea Class Action Services For About $670mn Very interesting deal for the worlds largest fund services company. SS&C built the worlds leading fund services company by buying 20+ #fundadministrators over the past 25 years and selling their clients a combination of software and fund services. Brilliant move in a low interest rate environment in an industry where the cost of client acquisition is high. And it happened during an era where few PE backers understood the great value in Fund Administrators. And for SS&C and it #PE partners, its certainly been a very successful strategy. However, money is no longer cheap and more Fund Administrators have tied-up with PE backers, making competition for organic growth tougher and drying-up the M&A deal flow of the past. So, the Battea deal is interesting and needs to be considered in light of these forces. We start with the press release in which Bill Stone, CEO of SS&C says: "Securities class action settlement recovery is an ongoing concern, with hundreds of cases led yearly. SS&C's multi-asset trade data aggregation capabilities complement Battea's sophisticated analysis and extensive expertise. We look forward to further empowering our clients." This raises a few questions by some thought-leaders I have spoken with about the deal: Question 1 - Conflicts and Clients - which clients is Bill referring to? He serves asset managers and their funds and it seems that Battea's clients are investors. What conflicts exist and how will they be managed? Question 2 - Confidential Information - how confident are SS&C fund manager clients that detailed client information that SS&C possesses remains confidential? What controls are in place to protect it? Question 3 - Growth - was the acquisition needed to offset growth challenges faced by SS&C in their core fund services business, particularly in alternatives. When you remove the benefit of asset inflation from the growth reported by many top Fund Administrators you can see they struggle to grow market share in what has become a fiercely competitive market. Shoot me a comment with your thoughts on any of the questions raised. And if you are interested in understanding more about the 9 key factors that account for a Fund Administrators revenue growth please contact George F. Evans at gevans@convergenceinc.com #hedgefunds #privateequity #realestate #duediligence #riskmanagement #forensicaccouting #compliance #rias #fundadministrators #auditors #datascience #AI #venturecapital #duediligence #odd #forensicaccounting #fraud #riskmanagement #infrastructurefunds #investmentbanks #mergers #acquisitions https://lnkd.in/ep5DsWwz

Differentiation Expert Network Industry... The expert network space is crowded. Most firms utilize the same resources to recruit new experts, creating significant expert overlap among the networks leading to issues with quality. With virtually no exclusivity, experts are incentivized to join as many networks as possible to increase chances of being engaged for consultations. Convergence helps EN firms access a unique pool of industry experts - we give you the tools to reach experts (with verified employment histories) that aren't readily accessible through traditional sources. The whitepaper linked below outlines how we think about the expert network industry and how we can support your firm. https://lnkd.in/eBijWw6F Contact me with a direct message, or email agambee@convergenceinc.com to learn more.

U.S. Securities and Exchange Commission charges Tennessee Investment Adviser Retirement Specialty Group, Inc. and its Owner with Religious Affinity Fraud - Complaint According to the SEC’s complaint, Wright primarily targeted Christian clients by promoting his and Retirement Specialty Group’s “faith-based” approach to investing. Between approximately June 2021 and July 2023, Wright and Retirement Specialty Group allegedly recommended and sold over $2 million in fraudulent promissory notes to at least five advisory clients and one other investor. In recommending and selling these notes, some of which promised monthly interest of up to 20%, Wright allegedly misled investors concerning the nature and safety of investing in the notes. Convergence Inc "red-flags" existed in 4 #compliance factors including the conflicted Chief Compliance Officer, no surprise given their size, yet still a "red-flag" that exists in >75% of SEC enforcement actions. #hedgefunds #privateequity #realestate #duediligence #riskmanagement #forensicaccouting #compliance #rias #fundadministrators #auditors #datasciience #AI #ODD #duediligence #investors

U.S. Securities and Exchange Commission Charges Investment Adviser HI2 Investment Management with Custody Rule and Compliance Violations - Fine $$75,000 According to the SEC's order, from 2018 through 2023, HI2 Investment Management had custody of client assets related to five funds but failed on 17 occasions to provide timely annual audited financial statements to investors or otherwise comply with the custody rule's requirements. In addition, the SEC's order finds that HI2 Investment Management failed to adopt and implement written policies and procedures reasonably designed to prevent custody rule violations. Convergence Inc "red-flags" existed in 33% of HI2's compliance factors. And yes, the Chief Compliance Officer was conflicted, no surprise given their size, yet still a red-flag that exists in >75% of SEC enforcement actions. https://lnkd.in/eQqc6R6r #hedgefunds #privateequity #realestate #duediligence #riskmanagement #forensicaccouting #compliance #rias #fundadministrators #auditors #datasciience #AI #ODD #duediligence #investors

U.S. Securities and Exchange Commission and Exchange Commission - Cease and Desist Order Against Farnham Fisher Collins, dba Collins Capital Management - Subject - Custody Rule Violations - Fined - $65,000 This proceeding arises out of the failure of former registered investment adviser Collins Capital Management (“CCM”), an unincorporated sole-proprietorship of Farnham Fisher Collins (“Collins”), to comply with the independent verification requirement for client funds and securities for which it had custody for the period of at least 2012 through 2023, in violation of Section 206(4) of the Advisers Act and Rule 206(4)-2 thereunder, commonly referred to as the “Custody Rule.” 2. Respondent also failed to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder with regard to client accounts of which it had custody, in violation of Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder.  "Red-flags" existed in 27% of the operational risk conditions Convergence Inc measured in Collins during the infraction period including our favorite, the conflicted Chief Compliance Officer. 35% of the 14 Compliance functions tested had red flags. Question for #investors, would you have invested with Colony if you knew these red flags existed at the time? https://lnkd.in/dvn8NauJ #hedgefunds #privateequity #realestate #duediligence #riskmanagement #forensicaccouting #compliance #rias #fundadministrators #auditors #datascience #AI #datascience #ODD

U.S. Securities and Exchange Commission Charges Nine Investment Advisers in Ongoing Sweep into #MarketingRule Violations. Fines ranged from $60,000 to $300,000. According to the SEC the firms made untrue or unsubstantiated claims or lacked required disclosures Convergence Inc risk scores were "High" in 5 Advisors Convergence Inc risk scores were "Medium-Watch" in 4 Advisors Convergence Inc identified a conflicted Chief Compliance Officer in 4 Advisors #fundadministrators #auditors #compliancefirms #lawfirms #investors #duediligence #forensicaccouting #privateequity #hedgefunds COMPLY ACA Foreside Red Oak Compliance Solutions Titan https://lnkd.in/eFZhm7P2

U.S. Securities and Exchange Commission Charges Raskob Kambourian Financial Advisors, Ltd for Failing to Disclose Fee Increases to Clients and agrees to pay disgorgement of $1,364,513 plus prejudgment interest thereon of $256,068; and imposing a civil money penalty of $225,000. This small adviser (<$50mm in RAUM) terminated its registration in October of 2023, yet our final risk analysis indicates high-risk business conditions across their operations and compliance functions during the periods cited in the infraction. And of course, the conflicted CCO condition, multiple advisory and other businesses and types of compensation risk factors all signaled "red-flags." We wish to remind #investors #auditors #duedilignece #risk management and #fundadministrators that invest in or do business with #rias #gps that 75%+ of the SEC cases involving financial harm to investors have a conflicted Chief Compliance Officer. While small RIAs and those that say that "we can't afford to separate the functions," Convergence advocates that the additional cost should be necessary to have the right to be a registered investment advisor. The U.S. Securities and Exchange Commission should look at their own data and require the separation. I know Rias, SROs and Lobbyists will howl at this suggestion as heavy handed, anti-business and anti-growth, yet the reputation cost to the industry and the pocketbooks of those RIAs who "get the joke" on this most fundamental segregation of duties outweighs the anti-business concerns. Let's not forget that the founders of most new advisers more often than not have enjoyed financial success from the firms they spin-out of and can afford to pay the cost.

SEC Charges Advisory Firm ClearPath with Custody Rule and Liability Disclaimer Violations The U.S. Securities and Exchange Commission announced settled charges against ClearPath Capital Partners LLC, a $147mm RIA, for failing to comply with requirements related to the safekeeping of client assets and for its use of impermissible liability disclaimers in its advisory and private fund agreements. Red-flags existed in 22% of ClearPath's non-investment risk factors with "red-flags" concentrated in six of seventeen compliance factors. And yes, the Chief Compliance Officer was conflicted, no surprise given their size, yet still a red-flag that exists in >75% of SEC enforcement actions. #hedgefunds #privateequity #realestate #duediligence #riskmanagement #forensicaccouting #compliance #rias #fundadministrators #auditors #datasciience #AI https://lnkd.in/duRVVRwV

U.S. Securities and Exchange Commission - Cease and Desist Order Against CAPITAL INVESTMENT ADVISORS, LLC - Subject - Expense Allocations and Compliance Policy and Procedures Failures This matter arises from registered investment adviser Colony’s failures to follow certain contractually agreed procedures governing the timely disclosure of and consent to expenses that Colony allocated to eight private real estate investment funds it managed (the “Funds”) for services provided by affiliates of Colony to the Funds. "Red-flags" existed in 44% of the operational risk conditions we measured in Colony during the infraction period including our favorite, the conflicted Chief Compliance Officer. 50% of the 18 compliance functions tested had red flags alone. Question for #investors, would you have invested with Colony if you knew these red flags existed at the time? https://lnkd.in/dvn8NauJ #hedgefunds #privateequity #realestate #duediligence #riskmanagement #forensicaccouting #compliance #rias #fundadministrators #auditors #datasciience #AI