Cayman Funds roundtable at Ernst & Young’s offices


is the problem we’re trying to fix? We’ve got issues, but no jurisdiction is perfect, there are always improvements that can be made, but this has been approached as if the jurisdiction is fundamentally flawed, and it isn’t. So why are we doing this? That’s the question we should be asking or trying to answer.


Why does CIMA feel the necessity to do it this way with such a


massive sweeping approach that threatens such significant change? Why is the change necessary? And I think that if you can’t answer the question, or CIMA can’t answer the question particularly as to why the change is necessary for this jurisdiction to survive, then I don’t understand what we’re doing.


GR: Investors are the parties pushing for change. Although it’s a


minority; they are influential and persistent parties and, as the saying goes, the squeaky wheel gets the oil. Transparency, in the right form and medium, is critically important, however, it’s unfortunate that things have been proposed in the manner and form they have been recently. I believe that sophisticated investors make valuable contributions, however, at the same time they are looking at things only from their perspective as well. There is a balance and limit to transparency and ultimately if they’re not getting the information they need they can vote with their feet. Unfortunately, for some investors, and the media in particular, numbers have become synonymous with capacity, which is completely and utterly ridiculous, to be blunt. If numbers are the sole determination of capacity, they are misinformed and need to be educated otherwise.


By the time they sit down with a professional director and understand


the composition of the director’s portfolio they serve, and then go a little bit deeper it becomes apparent that numbers do not equal capacity— capacity equates to time. Once they figure out what a director does with their time then I think they’ve figured out the capacity query and are making an assessment as to whether they are comfortable.


There are a number of different models which service different tiers


of the industry, and I’m comfortable with many of them, in fact all of them, depending on the circumstances. The market can decide. There are one-man band models all the way through corporate directorship models, where although there are often individuals serving on the boards rather than a corporate entity, it is effectively a corporate directorship model. Is either end of the spectrum a bad thing? Not necessarily, depending on the circumstances, and there are many like us who have models in between.


We disclose the number of relationships we serve, but not the names of the entities as we think there’s a competitive issue from a firm as


6 CAYMAN FUNDS | 2013


well as jurisdictional perspective, and that with full transparency there is a risk that others are going to start poaching clients. Additionally, there will be a media frenzy of people going on about so-and-so who lives in the Cayman Islands and serves as a director on X number of boards, etc, without really understanding what a professional, non- executive independent director’s role is in relation to private funds.


Now it could be positive, in the sense that everybody’s numbers


will be more comparative rather than the current forums that are out there through various non-profit groups, as the information they currently have is incomplete. Perhaps what is needed is for CIMA to be mandating that directors disclose the number of Cayman- domiciled funds they serve, which can be maintained and distributed from the director, rather than being on a centralised database for everybody to access.


But then the question becomes who do we have to disclose it to?


For example, a current or prospective investor, who arguably needs such information to make an informed decision would make sense. Maybe that’s the approach to take, but some kind of broad-based, public database I believe will be bad for the entire industry, and Cayman as a jurisdiction.


TB: Who does it better than Cayman? There’s no jurisdiction that


comes remotely close to providing independent director services of the quality Cayman does. I just wonder why all of a sudden we feel the need to shoot ourselves in the foot, because one thing we’re going to get criticised on is the number of relationships that individuals have and the number of directorships individual directors have, and we’re looking at publicising that. What we should be saying is we think we’ve actually got the best quality by a long shot of independent director services.


GR: I want to be doing my job, I don’t want to be fielding media


questions for a whole bunch of hype. Capacity equals time and at the end of the day, these things are taking up more and more time. The reality is, as fiduciaries, we need to be focusing on what we’re supposed to be doing. I think a lot of this is people looking for a niche to promote their services. There are good people on all ends of the spectrum from the one-man bands to those who have highly levered models, with a lot of support staff. Everyone has a different outlook on the role of fulfilling their fiduciary duties and everyone is also looking for the perfect marketing pitch. In my opinion, respectfully, caps are the perfect example of a marketing pitch. How can you compare one relationship to another relationship? It’s virtually impossible. To me there’s only one reason for caps—they are a marketing pitch.


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