The other offshore disaster

| 26/06/2010

(The New York Times): Canaries are small. Coal mines are big. Finding one in the other is never easy. There is little debate these days, though, that the implosion in the summer of 2007 of two Bear Stearns hedge funds — run by two bankers, Ralph Cioffi and Matthew Tannin — was the first sign that significant trouble was brewing in the market for subprime-mortgage-related securities and for the Wall Street firms that manufactured and sold them.

… To understand one of the central reasons the hedge funds failed — aside from the obvious one that Cioffi and Tannin were terrible investors — it is necessary to take a trip to an island paradise: George Town on Grand Cayman Island …

Go to NYT commentary

Related reading: The Offshore Director: Risks, Responsibilities and Liabilities by Tim Ridley

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Comments (6)

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  1. Anonymous says:

     I don’t think William D. Cohan should write anything and put the Cayman Islands into it until he learns that there are three islands and we are called Cayman Islands not Grand Cayman Island/s and/or Grand Cayman not Grand Cayman Island/s.

    • pauly cicero says:

      Jet ski?, waverunner?, personal watercraft? – We all know what he is talking about.

  2. Tim Ridley says:

    In January 2009, I gave a speech entitled "The Offshore Director: Risks, Responsibilities and Liability" that sets out in full my views on the subject. I will ask CNS to post it. Tim 

    CNS note: Tim, I’ve posted a link to the speech below the link to the NYT commentary.

    • Chris Johnson says:

      Good article Tim. I hope all directors will read it but many are too lazy and sloppy to do so which will result in more litigation.

  3. Anonymous says:

    Thanks for drawing our attention to this, CNS. There is still clearly much that is untoward in the way we do business in our Financial Industry and until we do better we will continue to garner this type of unwelcome and unfavourable comment. I would like to see what Mr Travers or Mr Ridley would have to say about this.

    • Chris Johnson says:

      This article is just one of many regarding lawsuits that have been taken out against Cayman directors provided by local firms or where Cayman directors are cited for being negligent.There is no qualification for directors and no regulation unlike most financial centres.Cayman desperately needs a directors’ disqualification act to control the cowboy element.The number of directorships that any one person can hold needs to be limited. Holding 450 directorships as one well known entrepreneur does is asking for trouble and explains why he and his firm have been mentioned in a number of law suits.I hope that CIMA reads these articles and takes active measures against those whose standards fall short of the norm in order that those who do know what they are doing are not tarred with the same brush.

      In addition it is high time a law was introduced to preclude directors from being indemnified by companies against their own recklessness, which precludes a company from suing them. Such a law operates in the UK and many other countries. As I have said on many occasions our financial laws need some serious revision but no one seems to care.

      Accountants, lawyers, bankers and other professionals are subject to regulation. Why not directors?