Forging ahead: AIMA addresses the times

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As the newly elected Alternative Investment Management Association Cayman executive council gathered for their first meeting and a discussion on the state of current issues ensued, it quickly became apparent that the group had its work cut out. 

About AIMA: The Alternative Investment Management Association “AIMA” has over 1000 members in countries all around the globe. The Cayman Chapter, launched in 2006, is a not-for-profit trade association dedicated to representing the islands alternative investment community. Addressing the real issues effecting the industry’s development, the Association provides a centre of knowledge for professional investment practitioners. AIMA’s corporate members enable the Association to create global tools for the benefit of its members, institutional investors and regulators.

With the financial markets across the globe in unprecedented distress and policy makers and commentators eager to find an exact cause of the crisis, the Cayman Islands fund industry finds itself again (or still) on the defensive. The view around the table held that action on behalf of this group needed to be both carefully crafted and immediate, with priorities of advocacy and communications established that will fall in step with AIMA’s global objectives and response to the crisis.

As a chapter of one of the world’s most active hedge fund associations in the world, AIMA Cayman has the significant background resources necessary to embark on the educational, consultative and communication initiatives that will be required in the months to come. AIMA Cayman was formed two years ago and in that time has gained a strong membership comprising 47 of AIMA’s 1,280 corporate members globally, with representation from across all sectors of the hedge fund industry.

AIMA initially formed in the UK to provide a voice for the hedge fund industry worldwide and has a concise mandate: “to provide an interactive and professional forum … and act as a catalyst for the industry’s future development; to be the pre-eminent voice of the industry to the wider financial community, institutional investors, the media, regulators, governments and other policy makers; and to offer a centralised source of information on the industry’s activities and influence, and to secure its place in the investment management industry”.

Times have changed a great deal since AIMA was established in 1990, when these objectives were laid out, but their importance is greater now, in these times of crisis, than ever before. In a recent communiqué to AIMA members, CEO Florence Lombard, carefully articulated the current position of the association in the financial world:

“We will resist any unsubstantiated accusations of market abuse levelled at the hedge fund industry; where accusations still stand we call for evidence of market abuse to be presented in the interests of regulatory and market transparency. We support any and all measures that identify and prevent market abuse, wherever it exists”.

The increased effort to communicate with policy makers and regulators is necessary in order to be intimately involved in the change process and this association has the benefit of the high calibre knowledge and expertise of its members at its fingertips. Ms Lombard goes on to say that “if there is to be a wholesale change to the regulatory regime we call for there to be a full process of consultation to ensure that all legitimate interests are represented. We call for policy makers and regulators to recognise the role of consultation in formulating sound regulatory practice. On behalf of the hedge fund industry, we would welcome the opportunity to participate in any legislative or regulatory hearings into the causes of the current crisis and how to avoid a repetition of it in the future” (AIMA letter to members: “Market Turmoil: AIMA’s position, activities and strategy, 10 October 2008”).

AIMA recently reached out to the Managed Fund Association, which is another active fund association predominant in the United States. As AIMA is headquartered in the UK and the MFA is based in the US, the market and media coverage opportunities are obvious, as are the synergies of their overall objectives.

One of the first projects the new partnership enacted was the preparation of documentation and industry responses provided to policy makers and the media on the issue of short-selling, a very hot topic in the news of late, the ban of which is highly contested by both AIMA and the MFA.

AIMA Cayman, following the structure of the global organisation, is governed by the activities that fall mainly under regulatory issues, education and research, and communications and advocacy.

Although AIMA globally is waging a battle to educate governments and individuals about the important role that the hedge fund industry plays in the financial markets and is working to justify and explain the positive function of the industry, AIMA Cayman is bracing itself against a double-whammy: the vilification of the hedge fund industry as the cause of the financial crisis and an accusing finger pointed to offshore centres – Cayman in particular – as the main cause of the meltdown.

Back in 1998 the Organisation for Economic Cooperation and Development embarked on a campaign targeting offshore centres by dividing them into two distinct groups: White List and Black List (i.e. those jurisdictions which were deemed cooperative and those that were not). Cayman avoided being placed on the list of shame by agreeing to modify existing practices to remove what was perceived by OECD member countries to be unfair tax practices by implementing a number of measures such as increasing transparency and entering into tax information exchange agreements with member countries.

Despite these efforts, it is becoming increasingly apparent that there is a great deal more work to do if Cayman is to aim centre of the ever shifting goal posts. The AIMA Cayman executive council understands that the work ahead must have a two-pronged approach: to work in consultation with and make recommendations to government for positive changes, modernising the Cayman legislative structure with a view to pushing Cayman forward as a leading offshore domicile for investment funds; and to be the (loud) spokesperson for the offshore hedge funds industry and advocating for true level playing field practices that can be applied to all.

In response to the increased pressure to conform to the wishes of those who would rather cause the jurisdiction harm, Cayman’s financial services industry as a whole is making plans, preparing message frameworks and working across groups both public and private to head off the inevitable onslaught of charges that will have to be faced, regardless of their level of validity. Representing the Cayman hedge fund industry, AIMA Cayman will be a vital participant in the initial consultative process and the ongoing implementation of the selected strategy.

With the backing of AIMA’s global arsenal of resources in the UK and the best-friends relationship that has been established with the leading US-based association, AIMA is best placed to start making some traction as the group increases its efforts to advocate for appropriate legislative reform related to the investment funds industry: modernising the Mutual Funds Law, the Companies Law and the Exempted Limited Partnership Law, to give Cayman an edge over competing jurisdictions; to conduct and facilitate specific research that can be used to educate both friend and foe of the offshore funds industry on the contributions that are made to local and global economic flows, and to prepare and communicate key messages that will be targeted at influencers in the world – those who are with us and those who are against us.

The AIMA Cayman executive committee comprises Mark Lewis of Walkers as chair, Rohan Small of Ernst & Young as deputy chair, Alan Milgate of Rawlinson & Hunter (Secretary), Greg Bennett of Butterfield Fulcrum Group as treasurer, Henry Harford of Maples and Calder as legal counsel, Gary Linford of DMTC as education and research, Stu Sybersma of Deloitte as events coordinator and Denise Gower of Ogier as media and communications, liaison officer.
 

 

AIMA Executive representatives

AIMA Executive representatives – Alan Milgate, Gary Linford, Mark Lewis, Deborah Drummond, Henry Harford, Andy Stepaniuk