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Cayman notches 10,000th hedge fund

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In a press release statement from Walkers, the Cayman law firm announces that the Cayman Islands have over 10,000 registered hedge funds as of the end of June 2008. Please see release below:

Cayman Islands Sets Milestone with 10,000 Registered Funds
28-Jul-2008

Recent second quarter figures from the Cayman Islands Monetary Authority (CIMA), have confirmed the achievement of a key milestone by the Cayman Islands financial services industry, with over 10,000 investment funds currently registered in the jurisdiction.

At the end of June 2008 there were 10,037 funds on CIMA’s register, compared with 9,681 at the end of the previous quarter and 8,972 at the mid point of 2007. The current annual growth rate of 12% in net new hedge funds, which takes cancellations into account, is particularly striking in the context of the deterioration in global markets following the sub-prime meltdown and associated credit crunch.

“This is yet another round of impressive statistics from CIMA,” said Mark Lewis, senior investment funds partner at Walkers. “The 10,000 barrier has been breached as hedge funds continue to be formed in the Cayman Islands, which remains the clear jurisdiction of choice for investment managers and their advisers around the world.

“Business remains active and the volatility which has impacted world markets as a result of the credit crisis, and the relatively weak valuations of many securities, has provided hedge fund managers with great opportunities to create alpha after a number of years of relatively flat returns”, Lewis added. “Hedge funds have also provided the market with much needed liquidity, which has been especially beneficial amid the current tight lending conditions.”

The continued growth in net hedge fund registrations is also partly explained by the absence of a significant spike in fund terminations. While there has certainly been a slight increase in terminations over the past 12 months, funds are not being closed at an unprecedented rate.

“There have been some forced closures, but in the cases where funds are struggling, the managers we work with are being pro-active by placing hard-to-value securities in side pockets, suspending redemptions and imposing gates. Such measures may enable a fund in distress to ride out the storm or to wind down its affairs in an orderly manner,” said Walkers investment funds partner Nick Rogers. “In the Cayman Islands the key drivers behind the actions being taken are the need to treat all investors equitably and to act in the best interests of the fund, and this provides a firm foundation for protecting market participants and preserving value.”

Among the new funds that have been established in the Cayman Islands, strategies such as distressed debt and special opportunities presented by the widespread markdown in asset prices have continued to feature strongly.

“There has also been significant ongoing activity in emerging markets and commodities,” Rogers added. “The convergence of these two hot asset classes has been particularly interesting.”

There are a number of factors behind the Cayman Islands’ attractiveness as a domicile for hedge funds, in particular the stable economic and political climate, the close relationship between the public and private sector and the presence of the world’s leading professional services firms. The regulatory regime in the Cayman Islands has been recognised internationally, notably by the International Monetary Fund (IMF) and the Caribbean Financial Action Task Force (CFATF) for its high standards. In the area of transparency and “know-your-client” regulations, these standards surpass many of the world’s top international financial centres.

SEC to revise ADV Part II

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Washington, D.C., Feb. 3, 2008 – The SEC reports an open meeting on the day before Valentines Day to discuss amending ADV Part II

Open Meeting — Wednesday, February 13, 2008 – 10:00 a.m.

The subject matter of the open meeting scheduled for Wednesday, February 13, will be:

1. The Commission will consider whether to propose amendments to its rules regarding the circumstances under which a foreign private issuer is required to register a class of equity securities under Section 12(g) of the Exchange Act.

2. The Commission will consider whether to propose a package of amendments to various Commission rules and forms to improve reporting by foreign private issuers. The amendments, if adopted, would allow foreign private issuer status to be tested once a year; change the deadline for annual reports filed by foreign private issuers; revise the annual report and registration statement forms used by foreign private issuers to improve disclosure; and amend the rule regarding going private transactions to reflect recent regulatory changes.

3. The Commission will consider whether to propose amendments to Part 2 of Form ADV under the Investment Advisers Act of 1940 and related rules. The proposed amendments, if adopted, would require investment advisers to provide clients with narrative brochures containing plain English descriptions of the advisers’ businesses, services, and conflicts of interest. The proposal also would require advisers to electronically file their brochures with the Commission, and the brochures would be available to the public through the Commission’s Web site.

4. The Commission will, as required by Section 109 of the Sarbanes-Oxley Act of 2002, review the annual accounting support fee of the Financial Accounting Standards Board.