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===What [[due diligence]] ''is''=== | ===What [[due diligence]] ''is''=== | ||
[[Due diligence]] is the process of seeking comfort from one’s [[contract|contractual]] service-providing counterparts — especially one’s [[custodian]]s, [[Clearing broker|clearer]]s and [[prime broker]]s — that they have a robust operational setup, staffed with well-motivated and enthusiastic [[subject matter expert]]s and connecting to competent [[sub-custodian]]s, service-provider]]s and [[agent]]s so that, notwithstanding the skillfully negotiated [[indemnities]], [[covenant]]s, [[representation]]s and [[warranty|warranties]] your [[ | [[Due diligence]] is the process of seeking comfort from one’s [[contract|contractual]] service-providing counterparts — especially one’s [[custodian]]s, [[Clearing broker|clearer]]s and [[prime broker]]s — that they have a robust operational setup, staffed with well-motivated and enthusiastic [[subject matter expert]]s and connecting to competent [[sub-custodian]]s, service-provider]]s and [[agent]]s so that, notwithstanding the skillfully negotiated [[indemnities]], [[covenant]]s, [[representation]]s and [[warranty|warranties]] your [[legal eagles]] have skilfully extracted from them in the [[verbiage]], your counterparties are nonetheless is ''factually'' capable of carrying out their obligations. | ||
[[Due diligence]] thereby gives '''practical comfort''' that the legal obligations are worth the paper they’re written on. | [[Due diligence]] thereby gives '''practical comfort''' that the legal obligations are worth the paper they’re written on. | ||
[[Due diligence]] is about [[fact]]s, not [[law]]. | |||
===What [[due diligence]] is ''not''=== | ===What [[due diligence]] is ''not''=== | ||
[[Due diligence]] is ''not'' an exercise in asking your counterparty to explain your legal {{t|contract}} to you. You can read that for yourself or, if you can’t bring yourself to do that,<ref>And who, really, could blame you?</ref> ask your legal | [[Due diligence]] is ''not'' an exercise in asking your counterparty to explain your legal {{t|contract}} to you. You can read that for yourself or, if you can’t bring yourself to do that,<ref>And who, really, could blame you?</ref> ask your [[legal eagle]]s to do that for you. Then ''they'' can advise you. But your [[broker]] is ''not'' your legal adviser, is specifically not be regulated to advise you on your contract (and, being the person on the other side of it, inherently [[conflict of interest|conflicted]] in giving you that advice). | ||
Nor is [[due diligence]] a fishing expedition. It is not an excuse for extracting commercially sensitive [[Confidential information - Confi Provision|confidential information]] from your broker or subcustodian, a legal entity who may, when wearing one of its thousand other faces, be your mortal competitor. Don't expect it to hand over all its legal contracts with suppliers to you. | Nor is [[due diligence]] a fishing expedition. It is not an excuse for extracting commercially sensitive [[Confidential information - Confi Provision|confidential information]] from your broker or subcustodian, a legal entity who may, when wearing one of its thousand other faces, be your mortal competitor. Don't expect it to hand over all its legal contracts with suppliers to you. | ||
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===What [[due diligence]] ''definitely'' is not=== | ===What [[due diligence]] ''definitely'' is not=== | ||
[[Due diligence is never, ever, to be referred to as “[[due dilly]]”. I heard this once from a chap who, to my enduring delight, is still employed in my organisation. Why do I say delight? Because as long as that chap is still here, there is at least one body between me and the wall I will eventually be lined up and shot against. He is my [[silver bullet]]. | [[Due diligence is never, ever, to be referred to as “[[due dilly]]”. I heard this once from a chap who, to my enduring delight, is still employed in my organisation. Why do I say delight? Because as long as that chap is still here, there is at least one body between me and the wall I will eventually be lined up and shot against. He is my [[silver bullet]]. | ||
{{sa}} | |||
*[[Silver bullet]] | |||