Former New York mayor Rudy Giuliani has teamed with investment adviser Nine Thirty Capital to tackle hedge fund fraud and mismanagement.

Nine Thirty Capital said it had worked with Giuliani Security & Safety to create an investigative due diligence process to identify "potential manager fraud and to protect investor portfolios".

Giuliani Security & Safety is a division of Giuliani Partners, the consultancy company founded by the former mayor in 2002.

Nine Thirty Capital said the due diligence process would focus on "the financial and operational soundness and credibility of the underlying hedge fund or other investment partners to whom assets are committed".

The principals, managers and employees of the funds in which Nine Thirty Capital invests will be required to undergo background and reputation checks. These will be carried out by a team of former law enforcement officials employed by Giuliani Security & Safety. They have experience of uncovering and prosecuting fraud and organized and white collar crime, according to Nine Thirty Capital.

Funds will also be subject to an operational review. This will assess the controls and procedures of the fund as well as counter-party and other relationships. Funds will face stringent on-site compliance visits, testing and independent verification, the company said.

Nine Thirty Capital said the due diligence process would be ongoing through the life of the investment.

Nine Thirty Capital manages assets for ultra-high-net-worth families and institutions. It was created in 1997 as a family investment platform to manage the capital of two New York based families. In January 2009 it was spun out as an independent investment management business.

The company said it typically allocates assets to hedge funds where it has established a direct and long-standing personal relationship with the principal decision-makers.

Giuliani said in-depth due diligence was critical, even if investors are familiar with the manager. "Considering the current state of our economy and the numerous financial frauds uncovered in the past year, it's no wonder that investors are extremely wary about where they should invest their money and are asking 'who can we trust?'" he said.

"Investors need to be sure that the people and funds they entrust with their assets aren't just saying all the right things, but are actually doing what has been promised," added Giuliani.

The due diligence platform developed by the companies will give "investors a truly open window into the backgrounds of the key people as well as the platforms standing behind their investments, so that they can see for themselves that their reputations are clean, their structures are sound, and their methods and counter-party relationships are in-line with the tightest standards of the industry," added Pasquale D'Amuro, CEO of Giuliani Security & Safety.

D'Amuro was formerly an assistant director in charge of the New York FBI office and was appointed as the inspector in charge of the investigation into the terrorist attacks of September 11, 2001. He has worked extensively in counterterrorism and counterintelligence.