Due diligence case study

Client

A law firm providing services for a public offering

Need

Background check of directors and officers of a company, using sources that will stand up in court or under regulatory review. The client provided the name of the company and the names, addresses, birth dates and places of birth for its five directors by email.

Process

1. Determined name variations and associations with companies. We searched InfoAction's subscription and free Internet sources to determine name variations for the individuals and other companies they had been associated with. We used this information to plan our search in advance, minimizing our costs in expensive time-based databases.
2. Conducted searches. We searched InfoAction's fee-based subscription databases for litigation, securities violations, court filings, bankruptcy records, and media coverage indicating potential negative activity. We used the information we had gathered in step 1 to check that documents we found were for the correct individual, using middle names and previous company associations.
3. Summarized and flagged results. We produced a summary letter identifying the sources we had covered, negative findings, and areas for review. We flagged our search results so that the client could quickly find relevant documents, but also provided the full record of our searches, in case the client is ever required to provide evidence of due diligence for litigation or regulatory review.

Deliverable

Summary letter, highlighting negative findings on each individual, plus background material flagged for information that should be examined more closely. Included search terms and selected details or full text of relevant documents.

InfoAction completed the research the day after receiving the email request, and the client sent a courier to pick up the printed results package and deliver it the same day.

Sources

LexisNexis (securities, case law, bankruptcy), FPInfomart, Factiva, Quicklaw (securities, case law), Office of the Superintendant of Bankruptcy, Canada Stockwatch, InfoTSX

Cost

$1350 for 6 names, at an average cost of $225 per name.