learning of yet another firm that scammed millions from investors: Canopy Financial. They forged audit reports from KPMG, who apparently WASN'T their auditor. We haven't yet heard whether they also claimed GIPS(R) compliance, so have no way of knowing whether their alleged chicanery extended quite this far.
Canopy had been featured in BusinessWeek and managed to be ranked #12 on Inc's 500 List.
Even though GIPS verifications aren't "designed to detect fraud," they can provide an extra level of confidence in the manager's credibility. We aren't advocating the verification be extended to include fraud detection, but believe that verifiers can serve as an extra level of scrutiny.
Who would have thought to call KPMG to check to ensure that they had, in fact, audited Canopy? Some additional checking may be necessary going forward, especially with certain firms, to help catch these guys quicker. Unfortunately, we can't control shameful behavior, but we have to figure out ways to catch it. In this case, their investment bank actually helped them raises tens of millions of dollars. Is someone asleep at the wheel? Unclear at this time, but we're sure more will be forthcoming. While this doesn't rise to the level of a Bernie Madoff scam, many were no doubt impacted by it.