Gabby Riggione No Comments

Earlier this month, Convergence saw another adviser on the receiving end of a significant fine levied by the SEC.  In this instance, Capital Dynamics incurred a $275 thousand fine for “improper allocation of certain expenses to a private equity fund client.”   Fund expenses have been an SEC hot topic for some time now and Convergence has published several research papers on the factors that drive operating risk at advisers.  In this case, subscribers to Convergence’s Complexity Profile™ Service would have seen the high levels of operating risk at Capital Dynamics.  Based on a 3-year review, it was consistently assigned a “High-Watch” Complexity Profile™ and there are several red flags among the 40 complexity factors that Convergence reviews to identify operating risk.  The attached research paper discusses why Convergence believes Capital Dynamics is a “High-Watch” manager based on the red flags identified by Convergence.

Convergence Insight _16 - Complexity Continues to Drive Operating Risk_FINAL-2

Leave a Reply