The sudden collapse of major custodians such as Lehman Brothers not to mention a series of Ponzi schemes and last May's Flash Crash have dramatically shifted the due diligence priorities of mutual funds and other institutional investors as they scout for sub-advisers.

Today, those sub-advisers must be prepared to answer various questions about their operations and business risk, a major change from when most due diligence was focused on a sub-adviser's investment management practices.

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