Buy Side & Sell Side Due Diligence

Broker-dealers and asset managers have been taught about the differences in their obligations regarding buy-side and sell-side due diligence.  The truth is there really is no difference because in today’s litigious securities environment and herd mentality, failure to treat the sell-side of the transaction the same way you treat the buy-side places you in the position of being just one more part of the liability chain.  Reputations are made to suffer, you lose prime investors who got burned and your revenues are made to suffer.

Many sell-side broker-dealers have the dangerous habit of not wanting to rock the boat and just do the minimum of what’s required so they can get into the market.  This can potentially create the plaintiff counsel’s wet dream.  We all know this is true because:

  • Insurance costs are skyrocketing and now insurance underwriters are routinely exempting alternative investments and commercial real estate securities transactions from coverage because the risks are not being recognized or disclosed out of fear of being excluded from future syndications; and
  • Revenues are coasting downward because the value proposition of the broker-dealer is suffering to the onslaught of technology that could only happen if the reputation and guidance of the broker-dealer is no longer viewed as being valuable; and
  • FINRA and SEC complaints have gotten to the point where FINRA has to send notices like Regulatory Notice 10-22 to remind broker-dealers that they are not performing their core function – you know, the one that justifies the very existence of the industry.

Broker-dealer due diligence can be made less expensive, less time-consuming and become the source of a whole new profit center thanks to the advent of the INVIZEN IT Commercial Real Estate Real-Time Due Diligence System and its accompanying suite of broker-dealer due diligence support services designed to help eliminate investment fraud liability exposure and increase profits.  If you don’t have it you are losing money and opportunity.  If you don’t have it you may be at risk for still more complaints and still more premium increases.  If you don’t have it you may have to forego participation in CRE private placement offerings in DPPs.

INVIZEN Broker-Dealer Investment Fraud Claims Loss Risk Management & Prevention Program Operations

If you don’t have it…

Find out what your opportunities could be by contacting our offices today at 832.663.9634.