Wikipedia

Kroll Inc.

(Redirected fromDuff & Phelps)
For the Danish company, seeKrøll Cranes A/S.

Kroll(formerlyDuff & Phelps) is a financial and risk advisory firm established in 1932 and based inNew York City.[1][2]In 2018, Kroll was acquired by Duff & Phelps.[3]In 2021, Duff & Phelps decided to rebrand itself as Kroll, a process it completed in 2022.[4]

Kroll
IndustryCorporate investigation
Risk consulting
Financial advisory
Founded1932;92 years ago(1932)
Headquarters
United States
Number of locations
72
Area served
Worldwide
Key people
Number of employees
6,500
Websitewww.kroll

History

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Duff & Phelps

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Duff & Phelps was founded in 1932 by William Duff and George Phelps inChicagoto provide investment research. Since that time, the firm expanded into corporate finance and investment management, as well ascredit rating.In 1979, Duff & Phelps expanded intoinvestment management,creating what would become Duff & Phelps Investment Management Co. (DPIMC), which was spun off into its own company in 2009 and was no longer part of the main Duff & Phelps firm.

In 1984, the company was nearly acquired bySecurity Pacific Corp.in a $35 million transaction. However, the deal was called off in early 1985 by Security Pacific Corp. because of restraints put on the deal by theFederal Reserve Board,which would have precluded the company from issuing public credit ratings.[5][6][7]

First leveraged buyout and return to public markets

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The company was acquired five years later, in 1989, in a $146 millionmanagement buyout.The buyout was backed byFreeman, Spogli & Co.,aprivate equityfirm that controlled approximately two-thirds of the company, and management and employees owning the remaining third of the company's equity. The transaction was highlyleveraged,financed with 79% bank borrowings and 15% couponhigh-yield bonds.[8]The company was taken public for the first time in 1992 through aninitial public offeringof stock on theNew York Stock Exchange.[9]

By the mid-1990s, Duff & Phelps, which was operating as a publicly traded company, began to focus on its core investment management, financial advisory and corporate finance operations. As a result, in October 1994, the Duff & Phelps's credit rating business, Duff & Phelps Credit Rating Co., wasspun offto its shareholders and listed on the New York Stock Exchange.[10]In 2000, Duff & Phelps Credit Rating Co. was acquired byFitch Group,which later eliminated the use of the Duff & Phelps name.[11]

Second leveraged buyout and return to public markets

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In 2004,Lovell Minnick Partnerssponsored amanagement buyoutof the company, the second time the company had undergone a leveraged buyout transaction, acquiring the company from its then owner,Webster Financial Corporation.As part of the transaction, the company was merged with Stone Ridge Partners, a middle-market investment banking firm.[12][13]In 2005, the company raised equity fromVestar Capital Partnersto support the company's acquisition strategy that included the purchase ofStandard & Poor'sCorporate Value Consulting business as well as Valuemetrics, a financial advisory firm specializing in valuation services founded in 1981.[14]In 2006, it acquired specialty restructuring firm Chanin Capital Partners, LLC.[citation needed]

In 2007, Duff & Phelps completed its secondinitial public offeringraising $133 million and listing the company's shares on theNew York Stock Exchange.The IPO provided a partial exit for its twoprivate equityfinancial sponsors.[15]Also in 2007, the firm formed a strategic alliance with Tokyo-basedShinsei Bank.The firm has continued its acquisition strategy acquiring Dubinsky & Co., a financial consulting company and Kane Reece Associates.[16]In 2010, the firm acquired the consulting business of Dynamic Credit Partners, bringing specialized talent in complex fixed income securities analysis, valuation and litigation support.[17]

Subsequent leveraged buyouts and private company history

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After less than five years as a public company, Duff & Phelps again agreed to a take-private offer from private equity firms. On December 30, 2012, Duff & Phelps, announced that it had entered into an agreement to be acquired for approximately $665.5 million by a consortium, comprising controlled affiliates of or funds managed byThe Carlyle Group,Stone Point Capital LLC,Pictet & CieandEdmond de Rothschild Group.[18]

In December 2015, Duff & Phelps announced that the University of California’s Office of the Chief Investment Officer would make a significant minority investment in the firm. As part of the transaction, The Carlyle Group and Duff & Phelps’ senior management group increased its investment. Stonepoint Capital LLC, Edmond de Rothschild Group and Pictet Group sold their equity interest in Duff & Phelps.[19]

In November 2017, Permira, a global private equity firm, announced the acquisition of Duff & Phelps from The Carlyle Group, Neuberger Berman, the University of California’s Office of the Chief Investment Officer of the Regents and Pictet & Cie for $1.75 billion.[20]The management team, led by CEO, Noah Gottdiener and President, Jacob Silverman, maintained a significant equity stake in the company and remained in their rolls.

In January 2020, Duff & Phelps announced it had agreed to be acquired by a global investor consortium led by funds managed by Stone Point Capital and Further Global at a valuation of $4.2 billion.[21]Permira as well as the existing management team agreed to maintain a "a meaningful equity stake in the firm."[22]

M&A History

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In 2007, Duff & Phelps acquired Rash & Associates, a nationwide provider of property tax management services. In 2009, Duff & Phelps acquired Lumin Expert Group, a financial consulting firm specializing in intellectual property dispute support and expert testimony.[23]In June 2010, Duff & Phelps announced it acquired Cole & Partners, a Toronto-based independent financial advisory practice. The acquisition established a Canadian presence for Duff & Phelps and enhanced the firm’s dispute consulting, valuation and corporate finance advisory services.[24]In July 2011, Duff & Phelps announced it acquired Growth Capital Partners, a Texas-based investment banking firm focused on transactions in the middle market.[25]

In July 2014, Duff & Phelps acquired the Restructuring and Insolvency Division of RSM Farrell Grant Sparks ( “RSM FGS” ), one of the largest dedicated restructuring and insolvency teams operating in the Republic of Ireland. The acquisition expanded Duff & Phelps’ Global Restructuring Advisory Practice to include more than 200 professionals across Europe, the U.S. and Canada. In 2015, Duff & Phelps made two significant acquisitions. The first was of Kinetic Partners, a UK-based financial regulatory consulting firm with 200 employees. As a result of this acquisition, Duff & Phelps launched its Financial Regulatory and Compliance practice. The second acquisition was of American Appraisal, a Milwaukee-based valuation company with nearly 1,000 employees globally. This acquisition broadened the type of valuation work Duff & Phelps did in the U.S., specifically in fixed asset management and insurance solutions (FAMIS). In addition to the new locations in the U.S., the acquisition established new locations for the firm in Europe and Asia. The American Appraisal acquisition also included the Real Estate Advisory Group (REAG) business.

In May 2016, Duff & Phelps acquired Corporate Finance Ireland (CFI), a leading corporate finance firm in the Republic of Ireland.[26]

On June 4, 2018, Duff & Phelps purchased Kroll Inc.[3]and it purchased Prime Clerk in 2019.[27]

In February 2021, Duff & Phelps announced plans to unify the companies under the Kroll brand, which completed in February 2022.[28][29][30][31]

On March 25, 2021, Kroll announced that it had acquired Redscan, a UK based cyber security company.[32]In March 2022, Kroll acquired Canadian risk intelligence software company Resolver.[33]

Kroll Brand History

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Kroll was founded in 1972 byJules Krollas a consultancy servicing corporate purchasing departments.[34]

Kroll began its line of work in financial sector investigations in the 1980s when corporations approached Kroll to profile investors, suitors, and takeover targets.[35]

In the 1990s, Kroll expanded intoforensic accounting,background screening, drug testing, electronicdata recovery(with the acquisition of Ontrack Data Recovery[36]), andmarket intelligence.[35]

In 1997, Kroll merged with vehicle armoring companyO'Gara-Hess & Eisenhardtto form Kroll-O'Gara.[37][38]The company became public and was listed on the NASDAQ as "KROG".[citation needed]In August 2001, the O’Gara vehicle armoring businesses were sold toArmor Holdings,[39]and the company's name was changed to Kroll Inc.[38][40]and its ticker symbol to "KROL".[citation needed]

In 2002, Kroll acquired restructuring firm Zolfo Cooper for $153 million. At the time, Zolfo Cooper was working on theEnron case.[41]

In July 2004, Kroll was acquired by professional services firmMarsh & McLennan Companiesin a $1.9-billion transaction.[42]

In June 2008, Jules Kroll left Kroll Inc.[43]

In August 2010, Kroll was acquired byAltegrity, Inc.in an all-cash transaction valued at $1.13 billion. Altegrity declared bankruptcy in 2015,[44]and Kroll was later bought by Corporate Risk Holdings, LLC.[45]

On October 21, 2016,Carlyle Group-owned KLDiscovery purchased Kroll Ontrack for around $410 million[46]and operated it as a separate company.[citation needed]In 2018, Kroll acquired cybersecurity firmTiversa.[47]

Controversies

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In August 2020, in theCourt of Session,the ScottishLord Advocateaccepted that the prosecution of two Duff & Phelps administrators, Paul Clark and David Whitehouse, after theRangers F.C.administration in 2012 had been "malicious" and without "probable cause". The court ordered the interim payment of £600,000 costs to the administrators. The administrators sought £20.8 million in damages from theCrown OfficeandPolice Scotland.[48][49]

Services

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Kroll provides risk, governance, transaction and valuation advisory.

Background screening

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Kroll's background screening division provides screening services for areas such as employment, supplier selection, investment placement and institutional admissions. Kroll's Background Screening division also includes the Kroll Fraud Solutions unit, which specializes inidentity theftprotection and identity restoration services.[50]

Security consulting

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Kroll offers consulting services through Kroll Security Group, its Security Consulting and Security Engineering & Design division.

In 2020, Kroll was hired by theAustin Police Departmentto evaluate the department's policies and protocols for racism and discrimination. They presented their findings to the Austin city council in March 2021.[51]

Social media

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Kroll's business and investigations practice provides background checks on Instagraminfluencers,using publicly-accessible online information to prevent them being'cancelled'for problematic or potentially disreputable behaviour (e.g.tweetswhich includes offensive language or content).[52][53]

Other work

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An agreement between thegovernment of Ghanaand Kroll for the firm to retrieve assets and investigate wrongdoings by previous appointments was subject to two lawsuits in 2020, challenging the constitutionality of the agreement.[54]Both lawsuits were dropped in April 2021.[55]

Kroll was hired in 2018 byMichigan State Universityduring theLarry Nassar caseto investigate over 170 sexual assault cases at the university.[56]

Notable cases

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The Heroin Trail case

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In 1987, in the prominentFirst Amendmentcase over The Heroin Trail stories inNew York Newsday,attorneyFloyd Abramsenlisted Kroll's help to find an eyewitness: "But was it conceivable that we could come up with an eyewitness who could be of help? I called Jules Kroll, the CEO of Kroll Associates, the nation's most acclaimed investigative firm, to ask him if he could inquire, through the extensive range of former law enforcement officials employed by him, whether Karaduman was known to be adrug traffickerinIstanbul."[57]Two weeks into the trial Kroll produced Faraculah Arras, who was prepared to testify he was involved in one ofKaraduman's drug deals. "I was stunned," recalled Abrams.

Abrams used Kroll again in 1998 to investigate claims by CNN'sNewsstanddocumentary that sarin nerve gas had been used in Vietnam in 1970 as part ofOperation Tailwind.[58]

The John Fredriksen oil theft case

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Kroll assisted in the trial of Norwegian shipping tycoonJohn Fredriksenat the end of the 1980s.[citation needed]

Brazilian privatization

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Fernando Henrique Cardoso,Daniel Dantas,the company in question,André Esteves,Roberto Mangabeira Ungerand Dario Messer signed a schedule agreement to privatize Brazilian state-owned enterprises.[59]

WTC and Sears Tower security

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Kroll were responsible for revamping security at theWorld Trade Centerafter the1993 World Trade Center bombing.[60][61]They also took on responsibility for security at Chicago'sSears Towerfollowing theSeptember 11, 2001 attacks.[62] Just prior to the September 11 attacks, Kroll Inc., under the guidance ofJerome Hauer,the managing director of their Crisis and Consulting Management Group,[45]hired former FBI special investigatorJohn P. O'Neill,[63]who specialized in theAl-Qaedanetwork held responsible for the 1993 bombing, to head the security at the WTC complex. O'Neill died in the attacks.[64]

Capital outflows from the Soviet Union and Russia

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In March 1992, theYeltsin governmentcontracted Kroll to track down large sums of money removed from the Soviet Union prior to the1991 Soviet coup d'état attempt.[65][66]On March 15, 1992, following accusations from First Deputy Prime MinisterYegor Timurovich Gaidarof "large-scale privatization by thenomenklatura",the Russian government froze all capital outflows from Russia, and eventually, the assets of theVnesheconombank.[66][67]

Despite investigators stating they received very little support from Russian authorities, Kroll determined more than $14 billion (in 1991 real dollars) had been transferred from Switzerland to New York prior to the putsch (mostly injoint-stock companies,such as theLeningrad Association of Joint Ventures),[67][68]and that another $40 billion plus (in 2014 dollars) had been transferred out of Russia by the Communist Party and other government agencies of the former Soviet Union, through hundreds of illicit transactions.[69]This outflow of capital contributed to severe economic conditions in Russia duringBoris Yeltsin’s second term.[65]

2014 Moldovan bank fraud scandal

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On 28 January 2015, theNational Bank of Moldovahired Kroll to present its findings fromProject TenorinvolvingIlan Shor's Shor Holding and the2014 Moldovan bank fraud scandalwhich was part of theRussian Laundromat.[70]

Harvey Weinstein

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In 2015 Kroll was hired byHarvey Weinsteinto wipe evidence ofsexual abusefrom the electronic devices ofAmbra Gutierrezas part of a settlement he reached with her. Weinstein had frequent interactions with Kroll especially when trying to find discrediting information about potential critics and accusers.[71]

References

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  2. ^"Kroll Privacy Policy".kroll.Retrieved2022-04-09.
  3. ^abBanerji, Gunjan (March 13, 2018)."Duff & Phelps to Buy Corporate-Investigations Firm Kroll".The Wall Street Journal.The New York Times, New York City, United States.RetrievedMarch 17,2018.
  4. ^"Kroll completes brand unification".consulting.us.23 February 2022.Retrieved2022-04-07.
  5. ^Associated Press."Security Pacific's Duff & Phelps Bid".The New York Times,January 11, 1984.
  6. ^"Security Pacific Corp. Calls Off Acquisition of Duff & Phelps".Los Angeles Times,January 10, 1985.
  7. ^"Security Pacific, Duff Merger Off".The New York Times,January 10, 1985
  8. ^Berg, Eric N."A MONEY MANAGER IS IN THE MONEY".The New York Times,September 9, 1989.
  9. ^"Duff & Phelps Stock Offering".The New York Times,January 21, 1992.
  10. ^Duff & Phelps Credit Rating Co..SEC Form 10-K 2006 Annual Report, March 27, 1997
  11. ^Duff & Phelps Acquired.The New York Times,March 9, 2000.
  12. ^Duff & Phelps LLC Acquired by Management and Investor Group,March 15, 2004
  13. ^Company Briefs.The New York Times,March 16, 2004
  14. ^Duff & Phelps Acquires Valuemetrics; Plans Further Expansion of Financial Advisory and Investment Banking Practice,January 19, 2005
  15. ^Duff & Phelps files for $200 mln IPO.Reuters, May 23, 2007
  16. ^Duff & Phelps Buys Kane Reece.Mergers Unleashed, August 1, 2008
  17. ^"News"(Press release).
  18. ^Dealbook (2012-12-31)."Duff & Phelps to Be Sold for $665.5 Million".DealBook.Retrieved2022-09-06.
  19. ^"Duff & Phelps Announces New Minority Investment | Carlyle".carlyle.Retrieved2022-09-06.
  20. ^"Duff & Phelps to be Acquired by the Permira Funds for $1.75 Billion".permira.Retrieved2022-09-06.
  21. ^Beltran, Luisa."Permira Will Nearly Triple Its Money on $4.2 Billion Sale of Duff & Phelps".barrons.Retrieved2022-09-06.
  22. ^"Duff & Phelps to be Acquired by Global Investor Consortium for $4.2 Billion".permira.Retrieved2022-09-06.
  23. ^Duff & Phelps-DUF acquires Lumin Expert Group,Thefly,8 November 2008
  24. ^Ben Dummett,Duff & Phelps Eyes Canada With Cole & Partners Acquisition,Wsj,15 June 2010
  25. ^Bill Hethcock,Duff & Phelps acquires Growth Capital Partners,Bizjournals,5 July 2011
  26. ^Corporate Finance Ireland bought by US firm Duff & Phelps,Rte.ie,22 May 2016
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  29. ^Tewari, Saumya (2021-02-25)."Advisory firm Duff & Phelps to be rebranded as Kroll".mint.Retrieved2021-09-28.
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  31. ^"Duff & Phelps Announces Plans to Unify Company Under Kroll Brand".
  32. ^"Kroll completes Redscan acquisition, expands cyber risk portfolio".securitybrief.asia.Retrieved2021-07-30.
  33. ^Kobialka, Dan (31 March 2022)."Kroll Acquires Risk Intelligence Technology Provider Resolver".MSSP Alert.Retrieved31 May2022.
  34. ^Finnegan, William (19 October 2009)."The Secret Keeper: Jules Kroll and the world of corporate intelligence".The New Yorker.Archived fromthe originalon 5 September 2012.Retrieved20 April2022.
  35. ^ab"Kroll Associates, Inc. Releases Its Initial Report on the APD Training Academy | AustinTexas.gov".austintexas.gov.Retrieved17 July2021.
  36. ^How Ontrack Became Global Data Recovery Service Provider For Toshibahttps://mydatarecoverylab /how-ontrack-became-global-data-recovery-provider-for-toshiba/
  37. ^Miller, James P. (16 November 1999)."Kroll-O'Gara Management Agrees to Buy Out Firm".Wall Street Journal.Archived fromthe originalon 20 April 2022.Retrieved20 April2022.
  38. ^ab"COMPANY NEWS; KROLL-O'GARA TO SELL ARMORED VEHICLE BUSINESS".New York Times.24 April 2001. Archived fromthe originalon 27 May 2015.Retrieved20 April2022.
  39. ^"O'Gara Training & Services: Our History".O'Gara Training & Services (ogaratraining ).20 April 2022. Archived fromthe originalon 20 April 2022.Retrieved20 April2022.
  40. ^Meier 2021,p. 46.
  41. ^Hoare, Michael."Kroll pays $153m for Enron restructuring experts".fnlondon.Retrieved2021-09-01.
  42. ^Pilla, David."Marsh acquires Kroll in $1.9 billion cash deal",Best's Review,July 1, 2004, accessed January 28, 2011.
  43. ^Fabrikant, Geraldine (28 August 2009)."Corporate Sleuth Plans to Start Credit Rating Firm (Published 2009)".The New York Times.Archivedfrom the original on 2022-03-20.
  44. ^Brickley, Peg (9 February 2015)."Altegrity Files for Chapter 11 Bankruptcy".Wall Street Journal.Retrieved7 July2021.
  45. ^ab"Profile: Jerome Hauer".Forbes.Archived fromthe originalon May 22, 2009.
  46. ^"Press Releases - Stay up to Date with Ontrack".
  47. ^Khatchadourian, Raffi (25 October 2019)."A Cybersecurity Firm's Sharp Rise and Stunning Collapse".The New Yorker.Retrieved4 November2021.
  48. ^Mulholland, James (26 August 2020)."Rangers administrators awarded £600k after crown admit 'malicious' prosecution which breached their human rights".Daily Record.Retrieved26 August2020.
  49. ^Cameron, Greig (26 September 2020)."Rangers pair arrested 'maliciously'".The Times.London.Retrieved1 September2020.
  50. ^(Press Release) "Identity Theft Restoration."Canada News Wire, 12 July 2007." Identity Theft Restoration "
  51. ^"Kroll Associates, Inc. Releases Its Initial Report on the APD Training Academy | AustinTexas.gov".austintexas.gov.
  52. ^Moore, Matthew (31 October 2020)."Corporate detectives Kroll target Instagram stars".The Times.Retrieved31 October2020.
  53. ^Ebadi, Sherine (12 May 2021)."Protecting the Enterprise from Social Media Threats".CFO.Retrieved4 November2021.
  54. ^"A-Plus sues Attorney-General, Kroll & Associates over $1m payment - MyJoyOnline".myjoyonline.18 December 2019.Retrieved2021-10-20.
  55. ^"A Plus, Asare withdraw suits against gov't over removal of Domelevo, US$1million Kroll Associates cash saga".Modern Ghana.Retrieved2021-10-20.
  56. ^"Here's what MSU got for paying elite firm $6.2 million to investigate 170 sexual assault cases".Michigan Radio.2019-04-18.Retrieved2021-09-22.
  57. ^Abrams, Floyd(2005).Speaking Freely: Trials of the First Amendment.Viking Press. pp.124–137.ISBN0-670-03375-8.
  58. ^Robin Pogrenbin and Felicity Barringer (July 3, 1998)."CNN Retracts Report That U.S. Used Nerve Gas".The New York Times.
  59. ^EDITORIAL: AEPET está solidária com Duplo Expresso
  60. ^Douglas Frantz (September 1, 1994)."A Midlife Crisis at Kroll Associates".The New York Times.
  61. ^Carey, Carol (1 July 1997)."World Trade Center".Access Control and Security Systems Magazine.
  62. ^"About Us > History > Notable Cases".kroll. Archived fromthe originalon 2007-01-06.Retrieved2008-02-15.
  63. ^Kolker, Robert (17 December 2001)."O'Neill Versus Osama".New York.
  64. ^"John O'Neill's FBI Jacket and Passport Embody His Enduring Fight Against Terrorism | National September 11 Memorial & Museum".
  65. ^abDawisha, Karen(2014).Putin's Kleptocracy: Who Owns Russia?.Simon & Schuster. p. 18.ISBN978-1-4767-9519-5.
  66. ^abBohlen, Celestine (March 3, 1992)."U.S. Company to Help Russia Track Billions".The New York Times.RetrievedApril 30,2018.
  67. ^abSneider, Daniel (March 4, 1992)."Russia Goes After 'Party Gold': Money Communist officials allegedly shifted out of the country is called crucial to reform".Christian Science Monitor.RetrievedApril 30,2018.
  68. ^Belton 2020,pp. 60–61, 513.
  69. ^Tikhomirov, Vladimir (1997). "Capital Flight from Post-Soviet Russia".Europe-Asia Studies.49(4): 592.doi:10.1080/09668139708412462.
  70. ^Kroll Staff (2 April 2015).Project Tenor - Scoping Phase.Kroll Inc. Retrieved 6 July 2021.
  71. ^Farrow, Ronan (2017-11-06)."Harvey Weinstein's Army of Spies".The New Yorker.Retrieved2022-08-23.

Sources

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edit
  • Official website
    • Historical business data for Kroll Inc. (to 2004):
    • SEC filings
    • Historical business data for Duff & Phelps Corp:
    • SEC filings
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