Jump to content
House Price Crash Forum
cashinmattress

Hedge Funds In Cayman Islands Withdraw From Uk Banks

Recommended Posts

Hedge funds in Cayman Islands withdraw from UK banks

Financial institutions based in the Cayman Islands have halved their deposits in UK banks over the past 12 months

Hedge funds and financial institutions based in the Cayman Islands have been pulling their money out of Britain as they are hit by the credit crunch, according to figures from the Bank of England.

The low-tax regime and limited ­regulation of the Cayman Islands – with a population of 52,000 – has attracted 80% of the world's $1.3tn (£790bn) hedge fund industry.

Those institutions have almost halved their deposits in UK banks over the past 12 months, from $356bn at the end of the first quarter in 2008, to $173bn at the end of March, Bank of England data shows. The drop in Cayman Islands' deposits comes as hedge funds are being forced to return money to investors who have made big losses from the financial crisis. It also reflects fund losses from falling markets.

The outflow of funds from Britain puts the spotlight on hedge fund threats to abandon the UK because of higher taxes, tighter regulation and potential caps on executive pay and bonuses.

"Limiting bonuses through regulation will only move people around the world in search of a place to earn more freely," said Simon Davies, a managing director at ­private equity and advisory firm ­Blackstone in London.

Loans from UK banks to Cayman institutions also fell, but at a lower pace. Outstanding loans from UK banks to Cayman institutions outweighed Cayman deposits in UK banks by $124bn in the first quarter, a sharp increase from $12bn in the last quarter of last year, the data shows.

The Caribbean islands have attracted most of the world's hedge funds, although the institutions sometimes only have an appointed lawyer or advisory firm in the country, or barely a name plaque in a building. Hedge funds mostly operate from New York and London which housed about 500 hedge funds at the peak of the market.

Some hedge funds are closing down because of continuous withdrawals from investors, who want to cut their losses or keep their savings safe. Investors withdrew $256bn from the industry over the last two quarters, according to Hedge Fund Research. The number of funds and fund administrators registered in the ­Cayman Islands fell to 9,705 in the first quarter from 10,291 in the third quarter last year, according to the Cayman Islands Monetary Authority's Web site.

Law and accountancy firms in the Caribbean country have been busy restructuring funds, said Ingrid Pierce, a partner at Walkers law firm in the Cayman Islands. "We've seen some fund terminations and we have been busy with restructurings as firms need to return capital, or funds that are exposed to failed banks, such as ­Lehman," Pierce said. "Although things are now getting back to normal."

To stop hedge funds and private equity firms from moving out of London, the government has challenged a European Union proposal that plans heavier regulation on those industries.

Labour. Winning hearts and minds across the board.

Share this post


Link to post
Share on other sites
cant be long for capital controls to come into force

Problem with that is, who owns the capital? The hedge fund types are heavily involved in government, organized crime, corporate and other dangerous/influential types on the fringe of society.

Who tell them to stop playing poker then?

Share this post


Link to post
Share on other sites
Problem with that is, who owns the capital? The hedge fund types are heavily involved in government, organized crime, corporate and other dangerous/influential types on the fringe of society.

Who tell them to stop playing poker then?

Thats simply not true - I work for a hedgefund and every investor is carefully checked to make sure they are legit.

Share this post


Link to post
Share on other sites
Thats simply not true - I work for a hedgefund and every investor is carefully checked to make sure they are legit.

No smoke without fire Giddo.

Share this post


Link to post
Share on other sites
Thats simply not true - I work for a hedgefund and every investor is carefully checked to make sure they are legit.

Thats simply not true - I work for a hedgefund and every investor is carefully checked to make sure they can leg it.

Fixed.

p-o-p

Share this post


Link to post
Share on other sites
Problem with that is, who owns the capital? The hedge fund types are heavily involved in government, organized crime, corporate and other dangerous/influential types on the fringe of society.

Who tell them to stop playing poker then?

Sorry, CiM, but I don't accept a word of what you say. The fund industry is very highly regulated. It's not just beset with compliance/AML regulations, but Britain's economy and the attitude of our government to legitimate financial services business like this means that at a single keystroke, billons of $/£ can be moved to other jurisdictions, causing major job losses in our patch.

The joke is that Europe/OECD is so keen to be seen to be on top of financial crime that they have over-regulated to such an extent that the money is moving to parts of the world where there is less red tape and associated costs. Own goal. More economic misery for London and the excellent offshore centres which service it.

Share this post


Link to post
Share on other sites
Sorry, CiM, but I don't accept a word of what you say. The fund industry is very highly regulated. It's not just beset with compliance/AML regulations, but Britain's economy and the attitude of our government to legitimate financial services business like this means that at a single keystroke, billons of $/£ can be moved to other jurisdictions, causing major job losses in our patch.

The joke is that Europe/OECD is so keen to be seen to be on top of financial crime that they have over-regulated to such an extent that the money is moving to parts of the world where there is less red tape and associated costs. Own goal. More economic misery for London and the excellent offshore centres which service it.

You are an idiot too.

Share this post


Link to post
Share on other sites
What did Brown expect? He starts a war on tax havens AND expects them to keep their money in the UK?! I dont blame them......

Nice to hear someone talking sense for a change.

Obama and Brown are cutting up rough with tax havens to impress the impressionable. Tax havens didn't cause this mess.

What's worse is that big businesses (major pharmaceuticals, by way of example) have been leaving the UK in droves and setting up in Ireland - because of the unfavourable tax regime and to get away from a government that doesn't encourage or support business.

I agree - it serves labour right that these consequences are hitting home increasingly. Trouble is, it's inflicting long term damage on the economy

Share this post


Link to post
Share on other sites
And you are someone who can trade insults but doesn't have the knowledge, experience or, evidently, intelligence to argue the point rationally and like a grown up

Exactly - the guy knows nothing about HFs so as soon as a fact is produced - "you're and idiot".

Share this post


Link to post
Share on other sites
Nice to hear someone talking sense for a change.

Obama and Brown are cutting up rough with tax havens to impress the impressionable. Tax havens didn't cause this mess.

What's worse is that big businesses (major pharmaceuticals, by way of example) have been leaving the UK in droves and setting up in Ireland - because of the unfavourable tax regime and to get away from a government that doesn't encourage or support business.

I agree - it serves labour right that these consequences are hitting home increasingly. Trouble is, it's inflicting long term damage on the economy

Hasn't this been going on far longer than the recent problems? My understanding was slightly the opposite.. I thought that lots of high-tech business had set up in Ireland because the Europeans subsidised tax breaks for them making Ireland very cheap, not because the UK was particularly expensive (tax-wise) per se.

Edit to add: I thought a lot of this subsidy had also finished now, which is why a lot of it is packing up and leaving again.

Edited by libspero

Share this post


Link to post
Share on other sites
And you are someone who can trade insults but doesn't have the knowledge, experience or, evidently, intelligence to argue the point rationally and like a grown up

No problem.

By their very nature they are flirting with the very edge of any legal system.

Just look at the 'managers'.

Bernie Madoff? Robert Berlacher? Doug Scott.

Snip from Wiki: Hedge funds are typically open only to a limited range of professional or wealthy investors. This provides them with an exemption in many jurisdictions from regulations governing short selling, derivative contracts, leverage, fee structures and the liquidity of interests in the fund. A hedge fund will typically commit itself to a particular investment strategy, investment types and leverage levels via statements in its offering documentation, thereby giving investors some indication of the nature of the fund.

Investor yes, professional yes, wealthy yes, but regulated...hardly...

They are a sham and the playground of the corrupt. Yes there are some genuinely good people in there, but I think you are so very very far off base. Kittens, bubble gum, hugs...this is your world, not mine.

Max Keiser has talked extensively about them and his analysis carries so much more weight that some anonymous internet poster using Maggie as their avatar.

In Scotland they have saying...wheest. It applies here.

HEDGE FUND INFORMATION FOR INVESTORS

Hedge funds are minimally regulated private investment partnerships that historically accept only high-wealth investors. The theory behind their creation was that high-wealth investors are "financially sophisticated" and therefore did not need or want to incur the additional administrative expense of reporting to a regulatory agency. The label "hedge fund" is not a specific legal term, but rather is used to describe an investment vehicle with great flexibility in the investment strategies it can adopt; many of these strategies are unavailable to traditional mutual funds. Hedge funds can invest in equities, bonds, options, futures, commodities, arbitrage and derivative contracts, as well as illiquid investments such as real estate. This gives hedge funds the potential to profit in times of market volatility. Hedge fund managers are compensated on a contingency-based fee structure, which typically earns them a 1% management fee plus an incentive fee of 20% of annual profits.

Although the exact number of hedge funds is difficult to quantify due to a lack of centralized reporting requirements, it is clear that hedge funds have grown exponentially in the last ten years. Industry trade publications indicate that hedge funds have quadrupled in number (from approximately 2,100 in 1996 to approximately 8,800 in 2006), have over $1.3 trillion under management and account for 20% to 50% of the daily trading volume on the New York Stock Exchange.

Hedge funds offer many benefits, but because of the volume of assets under management, they draw special attention when they fail. Hedge funds can fail for a variety of reasons. A hedge fund with a small asset base can experience crippling cash flow problems following a period of poor returns on investment. Excessive leverage can precipitate sudden capital depletion when investing in volatile financial instruments or commodities. Of most importance to law enforcement and regulators, however, is when hedge funds fail due to fraud. Debate continues among civil regulatory agencies and in Congress as to what, if anything, should be done to regulate the industry to control potential fraud and abuse.

The current investment climate, which lacks regulatory scrutiny, may tempt unscrupulous hedge fund managers to commit fraud. Hedge funds themselves are not illegal; they are simply the vehicle that facilitates fraudulent activity by managers. The FBI has investigated a variety of frauds that involve hedge funds. In the Daedalus Capital Partners case, for example, a classic advanced fee scheme was perpetrated by the hedge fund manager; investors received false financial statements claiming large profits, when in fact the money was being siphoned off and used to finance the manager's lavish lifestyle. In the Global Time Capital Growth Fund case, on the other hand, the hedge fund manager was convicted of trading on material non-public information regarding an impending bank merger--a classic example of insider trading. Finally, in the Bayou Management LLC case, the hedge fund principals created a legitimate hedge fund, suffered losses in trading and later issued false financials to their investors to hide those trading loses.

Civil regulatory agencies like the Securities and Exchange Commission and the Commodity Futures Trading Commission have identified several indicators of fraud in hedge funds:

*

Lack of trading independence: hedge fund managers trading through affiliated broker\dealers

*

Investor complaints: investors being unable to redeem their investments in a timely fashion

*

Audit issues: lack of audits by reputable independent accounting firms

*

Litigation: hedge funds being sued civilly by investors alleging fraud

*

Unusually strong performance claims: hedge fund performance claims are better than market average over a long period of time (they can't always win, but if they do, possible indicator of insider information or false reporting)

*

Illiquid investments: investing in a commodity which is not easy to value (incentive to overvalue investment to earn a larger commission)

*

Valuation issues: use of related parties to value illiquid investments or use of a non-independent fund administrator

*

Personal trading: hedge fund managers trading in their own accounts

*

Aggressive Bear Shorting: hedge funds take a short position in a stock (bet it will go down) and orchestrate efforts to disseminate unfounded or materially false negative information about the stock, eroding the price and allowing the perpetrators to profit on the short position

INVESTOR DUE DILIGENCE - RED FLAGS

Depending upon its investment strategy, each hedge fund has its own unique investment risk and must be assessed based upon its own merits. Investors should fully understand the risk in investing in hedge funds and should conduct appropriate due diligence before investing.

Examples of due diligence could include:

*

reviewing www.SEC.Gov for past regulatory actions against the fund manager

*

reviewing state securities agencies web-sites

*

reviewing federal district, bankruptcy and appeals court records through www.uscouts.gov/coutlinks

*

locating and speaking with fund administrators and noting their independence

*

being sure a reputable independent accounting firm performs an annual audit

* hireing a due diligence firm to perform a more thorough background check

FILE A COMPLAINT (links)

If you feel you have been the victim of illegal activity in a hedge fund, you can file a complaint with the following organizations:

*

Securities and Exchange Commission Enforcement: www.enforcement@sec.gov

*

NASD Investor Complaint Center: www.nasd.com/InvestorInformation/InvestorProtection

*

Commodity Futures Trading Commission toll free complaint line:

866-FON-CFTC

*

FBI: www.tips.fbi.gov

Share this post


Link to post
Share on other sites
Hasn't this been going on far longer than the recent problems? My understanding was slightly the opposite.. I thought that lots of high-tech business had set up in Ireland because the Europeans subsidised tax breaks for them making Ireland very cheap, not because the UK was particularly expensive (tax-wise) per se.

Make your mind up when you've had a look at this:

http://business.timesonline.co.uk/tol/busi...icle3754198.ece

I'm not great with technology, so if I haven't posted that link properly, my apologies and hopefully someone can fix it.

Share this post


Link to post
Share on other sites
No problem.

By their very nature they are flirting with the very edge of any legal system.

Just look at the 'managers'.

Bernie Madoff? Robert Berlacher? Doug Scott.

Investor yes, professional yes, wealthy yes, but regulated...hardly...

They are a sham and the playground of the corrupt. Yes there are some genuinely good people in there, but I think you are so very very far off base. Kittens, bubble gum, hugs...this is your world, not mine.

Max Keiser has talked extensively about them and his analysis carries so much more weight that some anonymous internet poster using Maggie as their avatar.

In Scotland they have saying...wheest. It applies here.

:lol::lol::lol: FREEZE!! FBI....... warning people on investments! Ill tell you this for free the MINIMUM in where I work is 50million USD. Now, you dont get that rich by not being clever with money.

We have the FSA in the UK and the SEC in NY constantly watching us. These are facts. The ones you just googled are stereotypes for people who know nothing about how a HF works.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   287 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.