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West Palm Beach (HedgeCo.net) – On June 12, three IRS personnel participated in a teleconference designed to address open questions regarding the Report of Foreign Bank and Financial Accounts (FBARs) for calendar year 2008 that must be filed by June 30. It was their position that an offshore hedge fund is a “foreign financial account” for FBAR purposes and that, therefore, every U.S. investor in an offshore hedge fund should file an FBAR, whether or not the fund has any offshore bank or securities accounts.
The FBAR needs to be filed by U.S. persons that have a financial interest in, or signature or other authority over, a foreign financial account or accounts if the aggregate value of the account(s) exceeds $10,000 at any time during the year. The instructions to the FBAR provide that foreign financial accounts include “any accounts in which the assets are held in a commingled fund, and the account owner holds an equity interest in the fund (including mutual funds).” In the teleconference, the IRS personnel took the position that offshore hedge funds are foreign financial accounts for FBAR purposes.
Based on the instructions to the FBAR and this insight from IRS personnel, until further guidance is issued by the IRS, we recommend that an FBAR should be filed by the following persons or entities with respect to offshore funds:
• Every U.S. investor, including U.S. tax-exempt entities, in an offshore hedge fund (this includes both stand-alone offshore hedge funds and the offshore feeder in master/feeder hedge fund structure)
• U.S. feeder funds that invest in offshore master funds, and any U.S. investor that owns more than 50% of the U.S. feeder
• Any direct U.S. investor in an offshore master fund
• Investment managers that have a financial interest (for example, through their carry) in any offshore hedge funds (whether stand-alone, feeder or master)
This requirement is in addition to FBAR requirements applicable to U.S. persons or entities that have a direct or indirect interest in an offshore bank, securities or securities derivatives account. Therefore, any U.S. person or entity (for example, a U.S. hedge fund) that has a financial interest in such foreign financial account or owns more than 50% of the equity of an entity that has a foreign financial account needs to file the FBAR. Similarly, anyone with signature or other similar authority over such foreign financial accounts needs to file the FBAR.
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West Palm Beach (HedgeCo.net) – In a bizarre hedge fund story sent to me by a reader, an ex JP Morgan Director and ex trader for hedge funds Tudor and Brevan Howard has been traced by his ex wife’s investigators to Singapore where he allegedly has done work for JP Morgan.
According to the Sydney Morning Herald, Simon Sywak, who now lives in a Sydney suburb, was caught on video working in Singapore for the investment bank. Sywak had gotten out of paying maintenance for his children in Britain by saying he was a trainee bus driver and so poor he was forced to live with his mother-in-law.
Sywak’s ex wife, Helen Sywak, has started bankruptcy proceedings in Australia for $250,000 of court costs he failed to pay.
"If he doesn’t pay this amount in the next few weeks, it will bankrupt him and he will have to drop his case suing Westpac Bank for $1.3 million and upwards." Helen said in a letter to the Editor.
Sywak is suing derivatives trader Westpac in Sydney in the Federal Court, arguing that it still owes him a $1.3 million sign-on bonus that it had promised him, however he never started work with the bank because he failed its probity checks, according to the Herald.
His side of the story has yet to surface.
Alex Akesson
Edtior for HedgeCo.Net Email: alex@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
West Palm Beach (HedgeCo.net) – Cayman Island law firm Solomon Harris is today hosting its inaugural Webinar on the highly topical subject of ‘Managing Distressed Cayman Funds and lessons learned for new funds’.
"This fits in perfectly with our firm’s progressive approach to business and our focus on keeping our clients up-to-date and informed. This is particularly so as our firm tends to work directly with investment managers and the more informed our clients are, the better for us as their legal advisers," says Sophia Harris, the firm’s Managing Partner.
"The recent significant stresses placed upon hedge funds, particularly in Q4 of 2008, have given our investment funds group invaluable insight into the issues facing managers with liquidity problems and the legal and practical tools available to them." Paul Scrivener, partner and head of the investment funds group, said, "We were keen to share our experiences in a practical way with those involved in the industry and we felt the medium of the webinar was the ideal way to reach the widest possible audience."
Also helping with with the presentation is KPMG, locally known for the provision of US tax services to Cayman funds. Paul Hotchkiss of KPMG will be covering recent tax changes in the UK and the possible impact on Cayman Islands investment funds.
"I visited Cayman recently to undertake a series of seminars on these and similar topics and I am delighted to be asked by Solomon Harris to participate in their inaugural Webinar." Hotchkiss said, "UK taxation of offshore funds is undergoing significant change and also there has been an increased interest from HM Revenue and Customs in the structuring of such funds. As Cayman has been historically, and is still, widely used as jurisdiction of choice to establish funds with a UK focus, I hope my comments will be relevant to the participants who are involved with funds with a UK focus."
As investment funds are such a major part of the firm’s practice, the firm also launched its fund-specific website, ‘CaymanHedgeFundWorld.com’ late last year also with a view to keeping the firm’s clients better informed.
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New York – Trident Trust is expanding its fund administration service to the U.S. to cater to domestic hedge and private equity funds.
The new U.S. office offers clients access to Trident Trust’s three decades of experience providing independent corporate, trust and fund services to the financial services sector worldwide. Trident Trust currently provides services to more than 320 offshore funds with combined assets under management of more than $25 billion.
The new office is headed by Brian Visel, whose auditing and fund administration experience includes working for a leading international accounting firm and heading a global funds administration team servicing clients from start-up to large, diversified hedge funds.
Employing Geneva® and Advent Partner® as its core fund accounting platform Trident Fund Services, Inc offers U.S. funds a comprehensive, independent, administration service which includes complete fund accounting, net asset valuation, investor reporting and anti-money laundering compliance.
With the increased regulatory and investor demand for independently administered funds, Trident Trust’s new office is well-placed to provide both existing and new domestic funds an effective administration solution to their needs based on Trident Trust’s unique pricing model.
For more information contact:
Eileen Casey Trident Trust Fund Services NYC Representative Office 545 Fifth Avenue, Suite 402 New York, NY 10017 Tel +1-212-840-8280 Fax +1-212-944-5923 ecasey@tridenttrust.com
