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Operational Review

The Challenge:  The institutional investor services division of a major money-center bank, concerned about potential conflicts of interest and regulatory risk reduction, decided to use third parties versus internal staff to conduct operational due diligence on investment product they wanted to distribute to their client base. As this decision was being made, the bank already had a private equity offering ready for launch, and needed a comprehensive operational due diligence review conducted and delivered in 30 days.

The Solution: Using a robust and comprehensive due diligence questionnaire and document request list, MESA professionals were able to gather all necessary legal, operational and regulatory documentation covering the organization and key people, the fund structure and process, back office accounting, operations and technology, compliance and risk management, and key service providers and counterparties. Two senior MESA professionals performed on-site meetings with key staff, inspected the facilities, and documented its findings in a comprehensive report that identified areas of concern and deficiencies, along with an overall rating of the operational risk this offering would pose to the client and its investors.

The Result:  Where MESA identified deficiencies, MESA advised senior management of the bank on remedies that should be within the reach of the investment manager without significant hardship. The bank was able to work with the investment manager to ensure that remedies for the deficiencies were either implemented immediately or that they established concrete plans to remedy in a reasonable time period. The bank was able to proceed with the rollout as initially planned.

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