PSERS Signs Due Diligence Mandate with IMDDA

As it continues to expand into customized educational training, the Investment Management Due Diligence Association (IMDDA) announced the $53 billion Pennsylvania Public School Employees’ Retirement System (PSERS) has retained the group to conduct on-site, customized due diligence educational training programs.

“In the two years since we founded the IMDDA, we have attracted hundreds of professionals as members, worked with hundreds more through our international training seminars, and helped build understanding of and appreciation for the increasingly sophisticated role of due diligence behind today’s investment programs,” Andrew Borowiec, executive director of the IMDDA, said in a statement. “Today, we are thrilled to debut IMDDA’s first customized educational program for one of the world’s leading institutional allocators.”

The organization formed in 2015 with the goal to help institutions on a community level, but quickly found that many were having issues with due diligence.

“A lot of [institutions] were having problems hiring people. What they were finding was there was no pattern to learn the way people were doing due diligence,” Borowiec told CIO. “What they really wanted to do was build a standardization. The IMDDA was initially built to move toward benchmarking, setting up these practices, and setting up standards. We’re moving towards setting standards for these processes. That’s our ultimate goal.”

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In addition to creating a community in order to create certifications for due diligence, one of the elements being developed is a rigorous test to conforms with certification industry standards, including but not limited to the ISO 17024 Conformity Assessment and the American National Standards Institute (ANSI) accreditation requirements. Once the classes and demonstrations began, traction came swift.

“The idea was to put out ideas for best practices that we have gathered and what we found out was that there was an incredible need for it. The first classes we put on sold out immediately, ”Borowiec said.

Though these classes and creating these practices, PSERS reached out to the IMDAA requesting the organization perform an in-house operational due diligence (ODD) class in which its entire investment team was present. “That’s how we started with them,” said Borowiec. “It took several months going back and forth, and in the end we came up with a really customized class which worked really well [for them].”

“Due diligence is a vital function to our $53 billion investment portfolio and to the more than 500,000 individuals across Pennsylvania whom we serve,” Michael Benson, senior investment professional at PSERS, said in a statement. “The IMDDA is a strong partner to help our executives and staff better understand and embrace the concepts and practices of due diligence throughout our organization.”

In addition to new on-site ODD programs, such as classes for private equity and hedge funds, the IMDAA provides training seminars internationally, including a fundamentals and master classes. In 2018, the IMDDA will add a mergers and acquisitions due diligence class to their list of programs.

Tags: Due Diligence, IMDDA, PERS

UK regulator the Financial Conduct Authority (FCA) said it believes four asset management firms may have broken competition law by colluding on IPO price information. It is the first case the FCA is bringing using its competition enforcement powers.

The FCA issued a statement of objections to Newton Investment Management, Artemis Investment Management, Hargreave Hale Ltd, and River & Mercantile Asset Management LLP. According to the FCA, the four firms allegedly shared information by disclosing the price they intended to pay in relation to one or more of two IPOs, and one placing, shortly before the share prices were set.

“The sharing generally occurred on a bilateral basis and allowed firms to know the other’s plans during the IPO or placing process when they should have been competing for shares,” said the FCA in a release.

According to the allegations, Newton Investment Management, Hargreave Hale, and River & Mercantile Asset Management disclosed and/or accepted information about the price they intended to pay for shares in relation to one IPO, and a placing, both in 2015. And in 2014, Artemis Investment Management and Newton allegedly shared information about the price they intended, or were willing to pay, for shares in relation to another IPO.

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“The FCA will carefully consider any representations from the firms before deciding whether the law has been broken,” said the FCA. “Any final decision taken will be published providing more detail about the case.

London-based Newton Investment Management, which is a subsidiary of BNY Mellon, has assets under management of £55 billion, while Artemis manages £27 billion. Hargreave Hale was acquired by Canaccord Genuity Wealth Management in September.

The FCA said the findings are provisional, and may not necessarily lead to an infringement decision. A statement of objections, such as the ones issued to the four firms, gives notice that the FCA believes they have infringed competition law, and allows the companies the opportunity to respond with written and oral representations, which will be considered before any final decision is taken. The final decision is made by a three-member Competition Decision Committee group, which is separate from the case investigation team, and is not involved in the decision to issue the statement of objections.

In 2015, the FCA gained concurrent powers to enforce competition law under the Financial Services and Markets Act 2000.

Tags: FCA, Litigation, Pension, UK