wondering is if, since the various accounting standards brought out new disclosures for financial services, anyone’s done a study to see if it’s ever been worthwhile information from an investment analyst point of view.


Because I have never, in 15 years, ever have had anyone come


“Who does it better than Cayman? There’s no jurisdiction that comes remotely close to providing independent director services of the quality Cayman does.”


JS: As a jurisdiction though, what are we going to do? Are we


going to enter into an intergovernmental agreement 1 (IGA1), 2, or do nothing, is the big question right now.


GR: I think the consensus is for a Model 1 IGA. TB: I would say that this is a far bigger problem for the BVI fund


industry. I think, given how institutionalised Cayman is, this is not of great concern to Cayman.


JS: BVI came out early and stated they were going to enter into an


IGA1. TB: I would imagine the administrators are far happier looking after a


Cayman fund, with the types of investors you typically see in Cayman funds than in BVI.


JS: But what is the cost if Cayman does go IGA1? That’s the


question, as well who is going to bear that cost. ID: We can’t afford the regulation we currently have. This becomes


a very local question then, because it comes down to the hole in the Cayman budget, which doesn’t allow for any increasing regulatory staff of any kind of quality. The current regulator politely, but firmly is screaming “I’m having difficulty doing what you’re asking me to do now.”


GR: On the FATCA side, as administrators, how are you defining the


cost? Are you charging specifically, packaging it up? It seems like an opportunity.


RE: We’re agreeing the specific model with specific clients. Some of


the main concerns have to be the changes needed to both software and processes to meet new requirements to capture, document, analyse and ultimately report on investor information. Previously we could rely on a number of exemptions, but we will now need to execute documentation concerning any US ownership.


Making sure that one has all the required information in order to be


able to make a determination as to whether the ultimate beneficiary has any US indicia that will trigger reporting is of paramount importance.


In some instances, our clients have appointed other professional


service providers, for example audit firms, to take the lead on these initiatives. In those instances we are the service provider making sure that the systems and processes are in place in order to ensure that all relevant information is available.


PS: Is Dodd-Frank something that you’re thinking about? GT: I put together quite a radical, long-term thought on this, with


the form PF and the amount of detail and information. What I was


and say “We’re setting up a fund, we’d like to go US GAAP rather than IFRS, because the investment analysts of our investors say they prefer the financial disclosures.” I’ve never heard that, ever. Which begs the question: what are we doing this for?


And now if you have a form PF there is an enormous amount of


information which will be produced except for those under $150 million, which may come down. And investors are going to be pressuring to know that information, why do they need financial statements? Won’t it be that we end up as auditors doing agreed procedures on the likes of form PF?


GR: Based on feedback from managers as well as investors, the


usefulness of the information is definitely in question. Whether or not it is driven from a regulatory or an investor’s viewpoint, various constituents are always going to ask for more information. They are going to continue to ask for as much information and transparency as they can get, but a lot of the time, the information is of no use to them. So what it leads to is additional prodding and more questions which is taking up more time and resources from the managers themselves.


JA: It sometimes comes down to the discussion as to how we deal


with the cost. Ultimately it’s a matter of where is the regulatory burden? I’m not


going to get into the detailed arguments as to whether it should be paid out of the fund or whether it shouldn’t, but if there is a cost being borne by the fund, there’s certainly a stronger argument on the investor’s side that they should have access to it because they’re paying for the reporting—the utility of that information is a completely different issue. I personally don’t know precisely what the Securities and Exchange Commission (SEC) is going to do with the information, but one has to hope that at some point it will become a useful task rather than just a perfunctory regulatory issue.


The governance proposals PS: What about some of the on-Island stuff? How do the governance proposals look to you?


GR: I’ve always been a huge proponent of Cayman as a jurisdiction


in terms of governance. Cayman is a disclosure-based domicile and transparency is important—we need to, however, bear in mind what product it is we’re offering, namely private investment funds to sophisticated investors. If Cayman needs to be more transparent and investors need additional information to perform their due diligence, that’s fine, I don’t have a problem with that. It’s the proposed approach that comes into question.


There are a number of drawbacks to what has been proposed right


now from a jurisdictional, industry, and individual company standpoint; from a competitive standpoint; a confidentiality standpoint; as well as from administrative and cost standpoints. I just don’t believe that it has been fully explored and thought-out. I think there is a way to get to the end goal, which is transparency, however, I don’t necessarily agree with the proposal in its current form.


ID: I always have issues with these sweeping proposals and


suggestions that significant change is an absolute must. It’s been raised before in relation to fund registration rules as well, and although that’s now taken a bit of a back seat to this corporate governance paper that is more recent, it’s going to rear its head again. I often struggle to understand exactly why we are doing this.


We all hear CIMA’s answers to those questions when they’re


challenged and I don’t ever feel that it’s a good enough reason. If we are a disclosure-based jurisdiction, that has been doing this well for a number of years, that hasn’t been the cause of the financial crisis, what


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