This may include a simple mistake, a lapse in judgment or failure to exercise due diligence.

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Whether it is faulty ratings on Worldcom, Enron, structured financial products, or MF Global, the failures of rating agencies to exercise due diligence have significantly affected markets.

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If the money comes from one of a list of high-risk countries, or amounts to more than SFr10m, the bank must exercise due diligence and cross-check information.

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This is arguably just the exercise in due diligence that the primaries are supposed to provide.

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The Treasury committee is concerned that investors "did not exercise sufficient due diligence" and relied too heavily on credit ratings agencies for their investment decisions.

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But they're not liable for the actual performance of the funds if they've exercised--and continue to exercise--due diligence.

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Due diligence is an essential exercise for all investors to do prior to their investments in a fund.

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