For this installment of our CCO Spotlight series, ComplySci’s Chief Marketing and Client Officer Sue Childs interviewed John Ricciardi, Partner, CFO, and CCO at Madryn Asset Management. Madryn is a New York-based private investment firm which provides debt and equity solutions to healthcare companies specializing in transformative products, technologies, and services.
Can you tell us a bit about yourself and Madryn?
John: Madryn was founded in 2017 by Avinash Amin, a well-known healthcare investor who previously managed a private investment portfolio associated with a large hedge fund sponsor.
I was the first hire at Madryn and joined the firm as CFO/CCO. Avi and I had known each other for a number of years dating back to my time at Siguler Guff & Company in 2010. At Siguler Guff I had the unique experience of being part of multiple teams within the firm. I started in the accounting group, pivoted to the operations team where I oversaw the operations of their flagship Distressed Opportunities Funds, which at the time totaled over $5.0 billion in investor commitments, and finally worked closely with the COO on key business initiatives.
Prior to Madryn, I worked for Snow Phipps Group, a middle-market buyout private equity firm. I oversaw all aspects of financial reporting and tax and I was also involved with compliance functions and fundraising. Based on these experiences, it was a natural career progression, and an incredible opportunity, to join Madryn as CFO/CCO.
Did you find that your background in finance and accounting led you naturally into compliance?
John: Having the broader background in finance and accounting was certainly helpful in bridging the gap. When I started at Madryn, I was responsible for overseeing all aspects of the Firm that were not part of our core investment function. Compliance was one of the many hats that I was expected to wear, but I was also in charge of managing the creation of the firm’s IT infrastructure and our financial reporting process, building out the firm’s institutional processes and investor reporting policies, and working with ACA as our compliance consultant. If you combine all of these responsibilities, it makes sense that compliance would go hand in hand.
Does the recent GameStop news concern you, and how do you ensure employees are following the rules?
John: GameStop was a non-event for our firm given our area of focus on healthcare investing. Importantly, we have restrictions in place that prevent employees from investing in the healthcare industry in order to ensure there are no conflicts of interest.
We also monitor all the feeds and certifications on a real-time basis, thanks to ComplySci.
Of course, out of office activities are of slight concern, but we do have controls in place on the IT side to monitor activity on our company network.
As far as the GameStop issue is concerned, retail investing is rising because there is more access today than there used to be. It’s definitely something to keep an eye on.
“In compliance, you can’t have a narrow focus. Networking and being an active member of organizations is key. If you only pay attention to your day-to-day tasks, you aren’t doing your job properly”
Do you have an increased focus on social media monitoring, given the GameStop news?
John: We’re not on the public side so it’s less about social media and more about email monitoring. We conduct regular reviews to make sure employees are following the right procedures.
The role of the CCO keeps expanding. How do you stay focused and, at the same time, keep your eye on things that are changing and adapting like retail investing?
John: Staying focused is always a challenge. We do a mock SEC exam every year. We do a holistic review of our compliance program. We figure out what is and isn’t working from a compliance perspective. Then we make enhancements and implement best-practices into our compliance program.
In addition, I attend a number of key industry functions, such as the Private Equity CFO Conference. I read anything published by our accounting or law firms to stay in the loop. I do that, in part, because we’re a lean organization and it is especially important for me to know the state of the market.
Are there any key trends that have recently caught your eye?
John: I’ve been paying attention to the developments around Special Purpose Acquisition Companies (SPACs). The SPAC space is important to us right now. Currently, we haven’t sponsored a SPAC, but our target portfolio companies are SPAC candidates, so we are exploring this area as it may be relevant to our investing strategy.
Are there other industry trends particular to compliance that you find interesting?
John: Expert network utilization. In the healthcare space, expert network leverage is vital, but we have to monitor the expert’s background and potential conflicts. Some questions we must consider: Do they work at a public company? Are they on boards? Do they have exposure to public company investments? We have to be mindful of these questions and make sure that our investment teams are making appropriate disclosures and following the right procedures.
What professional achievements are you most proud of?
John: I am very proud of helping to institutionalize Madryn and position the firm for long-term success. It has been incredible to see the firm grow over the past four years. I enjoy coming to work every day and truly value the partnership I have with Avi and our exceptional team.
“Being part of a smaller and leaner team requires me to wear more hats. Compliance is not something off to the side. It’s definitely a core function of the firm. It takes a lot of commitment to make sure everything is running appropriately.”
What makes a successful CCO?
John: To be a successful CCO, you need to be connected. That means knowing the market, attending events and conferences, and reading thought leadership pieces from law and accounting firms.
You can’t just sit at your desk and be content with day-to-day administrative tasks. CCO is not a ‘sit still’ position. If you take this approach your methods will become obsolete, and you’ll hinder the progress of your firm.
There are a lot of pressures for a CCO. How do you unwind?
John: I grew up playing sports and I’m an avid fan of the NBA, NFL, and MLB. I’m also into fantasy sports and participate in various leagues. This allows me to take a step back and focus on something else for a while. It’s a great way to unwind and connect with friends and family.
Editorial Note: At ComplySci, we understand the tremendous value compliance professionals can gain from networking and learning directly from their peers. For the CCO Spotlight blog series, we are sitting down for candid conversations with Chief Compliance Officers from some of the firms we work with. This blog series will share those CCOs’ thoughts, ideas, and best practices for compliance programs with our readers. The views expressed in this blog post are the CCO’s own views and do not necessary reflect the views of their firms.