Institutional investors can experience difficulties, which may create systemic crisis in financial markets. Such problems need to be identified and rectified. This may mean revisions to law or regulation or capacity building for regulators, or changes to market practice.
In Russia, after the rouble crisis of the late 1990’s, Cadogan Financial worked with the regulator on crisis management during and following the market collapse following the repudiation of debt by the Russian government to suspend application of regulations where needed, to revise the regulatory framework and train regulatory personnel.
In Romania Cadogan Financial carried out an examination of a mutual fund, identifying significant fraud in which tens of thousands of small investors had lost their money, identifying the nature of the fraud and how to reduce the potential for its re-occurrence through changes in regulatory requirements and supervisory practices. In Korea investment funds suffered a crisis that had led to the loss of confidence and massive redemptions of mutual funds by investors; Cadogan Financial carried out a detailed analysis of the flawed operational practices and regulatory failures and recommended significant changes in legislation and regulation which would improve confidence and enable mutual funds to mobilise savings more effectively.
In Indonesia there was a crisis in redemption of investment funds from the early part of 2005, following the change in regulation requiring all funds to mark to market and a rise in interest rates in the later part of the summer. By September the industry was losing funds under management at a cumulative average rate of 5% per day. Cadogan Financial undertook an urgent forensic analysis of the causes of this crisis, recommending immediate action that could be taken in the short run to calm the market and in the longer term to amend legislation and regulation.
