--Harriet Agnew
Patricia Watters and Mason Snyder have launched Catalina Partners, a risk management consultancy targeting both institutional investors and investment managers in the U.S. Previously Watters was chief operating officer and chief compliance officer at Pacific Alternative Asset Management Company and Snyder was a director in the regulatory and capital markets consulting practice at Deloitte & Touche.
The financial crisis and Bernard Madoff’s fraud have highlighted the importance of operational due diligence, said Snyder. Neither investors nor managers had paid enough attention to the non-portfolio management side of things, he added.
Catalina would be employed on a monthly retainer by the client. Institutional investors often monitor their investment less thoroughly once capital has been allocated—the business risk can change and needs to be constantly evaluated, explained Watters.
The aim is for a customized due diligence process rather than a “one size fits all model,” said Watters. This reflects the evolving nature of the regulatory environment in the U.S., she added. Watters predicts a move towards a principle-based approach, as adopted by the U.K.’s Financial Services Authority, away from the rules-based approach of the Securities and Exchange Commission. The onus is likely to shift away from the regulator onto the investment advisor.
Catalina will also work closely with the U.S. President’s Working Group on Financial Markets report on hedge fund industry best practices which has gained broad acceptance by investors and managers as the new gold standard, said Snyder.
For investment managers, services include infrastructure and back office setup, data management and security, valuations of holdings and identification of the best vendor packages. The Newport Beach, Calif., firm won’t offer marketing.
Eight other staffers are lined up to work for Watters and Snyder on a contractual basis. All clients will have direct access to the two principals. Watters declined to specify fees but said it will depend on whether Catalina is hired on a retainer basis or a per-project basis. As the firm is not linked to a large bureaucratic organisation, rates will be “highly competitive,” she added.
This article was originally published in Alternative Investment News.