Conducting a preliminary public record background check may uncover issues that may immediately identify “red flags” before a company has fully committed a position to a candidate, potentially averting hiring someone who could damage a company’s business, reputation or shareholder value.

Experience has shown that firms generally consider conducting a background check as one of the final steps in the decision making process in hiring an executive level candidate. However, given the significant investment in time, money and efforts that the company needs to commit a candidate of this caliber, company’s should consider conducting a preliminary public record background check before making a significant investment in the candidate.

The Scenario

Diligentia Group was retained to conduct a background investigation on a native of South American who had spent more than 20 years in the United States working for an international investment bank.  The candidate was being considered for a position at an international financial institution based in the United Kingdom.  The client was in the early stages of conducting their due diligence on the candidate and requested a background investigation.

Given the timing of the negotiations, the client was hesitant to commit a significant amount of time and money to conduct a comprehensive background check in the multiple jurisdictions that the candidate had resided.  However, given the significant financial commitment and potential risk involved to their reputation, the client requested some preliminary background searches on the candidate to identify potential warning signs.  We suggested that client conduct a preliminary public record background check in the United States to determine if their were any potential issues that may exist.

Securities Regulator Records Discloses “Red Flags”

During the course of our initial investigation, a review of selective public records in the United States identified the following information through state securities regulators:

  • South American federal officials recently investigated three different investment banking transactions involving the candidate including an ongoing criminal probe by a South American federal prosecutor.
  • The candidate was terminated from his prior position at his former investment bank due to a “loss of confidence.”  According to various published reports and information provided by the candidate to the client, the candidate had “retired” from his position at the investment bank.
  • The Securities and Exchange Commission and the U.S. Department of Justice had conducted an investigation into the candidate’s trading activities relating to two different investment banking transactions.

The Result

Given the information identified during the course of our preliminary public record background check, the client ultimately decided (to no surprise) not to proceed with hiring the candidate, potentially averting significant damage to the company’s business and reputation.

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