Bart McDonough, CEO of cyber-security specialist Agio, subscribes to the premise. Given the phishing campaigns hedge funds are increasingly being targeted with, he says, the industry should carefully read the SEC’s report. “Sometimes there’s a case of cognitive dissonance with cyber security, with a high-level understanding that lacks specificity,” he says. “For firms thinking tech is going to save them, the SEC’s investigation reminds us that you also need a very good process.”

In our reviews, we still see considerably weak processes around transfers from and to LPs … investors’ defences can often be less robust than those of vendors and prime brokersBart McDonough, Agio

In McDonough’s view, hedge funds seeking to tighten up anti-fraud protections should first look at their investor base: “In our reviews, we still see considerably weak processes around transfers from and to LPs – money changes hands bidirectionally yet investors’ defences can often be less robust than those of vendors and prime brokers.” McDonough recommends what he terms a “penny drop” – wiring a small amount to test whether it reaches the right person – and video call verification as conventional phone calls can be intercepted.

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