Conrad Capital Management Consultants (CCM) has introduced the Independent Verification and Operational Review (IVOR). The tool is an on-site, independent audit and operational analysis that detects fraudulent processes and procedures. According to Ron Pateka, a director with CCM, hedge funds are first "apprehensive" about the procedure, but ultimately see the value of it and appreciate the tips that CCM offers for tightening up a hedge fund's business.
"[Hedge funds] are trying to rest people's fears, so they've hired an outside company to make sure they're doing everything correctly," said Donald Conrad, president of the company. "We want to try and help clean up what's going on."
The company says most hedge funds are doing things properly, but Pateka says they have found "discrepancies with valuing the portfolio that they didn't agree with" at some organizations. CCM has been in touch with the Securities and Exchange Commission to propose IVOR as a road map for regulatory decisions.