Educational Alpha S2: Conversation with Chris Addy, President and CEO, Castle Hall Diligence
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Feb 7, 2024 Chris Addy, the CEO of Castle Hall Diligence, expertly navigates the evolving landscape of operational due diligence. He shares insights on how technology is transforming the finance sector, shifting from manual to data-driven processes. The conversation tackles the critical need for transparency and accountability in asset management, especially as institutional investors rise in alternative investments. Addy also reflects on lessons learned from past failures, emphasizing the industry's responsibility to adapt and improve.
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Origin Story In Philanthropy
- Chris Addy began operational due diligence in 1997 while working as an accountant for Atlantic Philanthropies.
- He visited managers to reconcile custody accounts and discovered many had never been asked basic operational questions.
From Optional To Mandatory
- Operational due diligence shifted from an optional 'hood ornament' to a mandatory, structured discipline after major frauds and the GFC.
- Institutional investors now demand consistent professional skepticism and standardized processes.
FTX As Operational Failure
- Chris contrasted crypto and FTX failures with traditional hedge fund issues, noting basic operational controls were often missing.
- He described FTX as operationally incompetent with multiple obvious red flags ignored by investors.