The Institutional Investor’s Alpha magazine list of the Top 25 highest paid hedge fund managers has just been reissued.

James Simons of Renaissance Technologies and T. Boone Pickens Jr of BP Capital Management raked in $1.5bn and $1.4bn in 2005, putting them at the top of this year’s list, the first time two fund managers have earned more than $1bn.

The 26 hedge fund managers on the list (one extra due to a tie for 25th place) earned $363m on average - up 45 per cent from the $251m average in 2004. Rounding out the top five were hedge fund legend George Soros of Soros Fund Management with $840m, SAC Capital’s Steven Cohen with $550m and Paul Tudor Jones of Tudor Investment at $500m.

While many of the funds on the list had spectacular returns in 2005, the top 25 is often a reflection of which are the biggest funds - not simply the best performers. As funds increase their asset base, the management fees alone generate huge sums. In Mr Simons' case, his huge payout is partly due to the hefty fee structure of a 5 per cent management fee and 44 per cent performance fee (compared with the standard 2 per cent and 20 per cent) on his Renaissance flagship fund. But with a gross increase of nearly 60 per cent, it was also a banner year.

Mr Pickens, recorded stellar returns in the energy and commodities boom, with his firm’s energy fund up 89 per cent and the commodities fund up 650 per cent.

Hedgefund.net reports that hedge funds were up an average of 2.34% in April, according to the HedgeFund.net-PerTrac Universes. The top 25% of hedge funds gained an average of 3.04%, while the bottom 25% of hedge funds was up an average of 0.54% for the month. Macro sector funds, the month’s top performing strategy, were up an average of 5.13% in April. By comparison, the S&P 500 was up 1.22% during the month.

Through April, the year-to-date average gain for hedge funds was 8.21%. The top 25% of hedge funds gained 10.72% for the year-to-date, while the bottom 25% was up 3.25% over the same period. The S&P 500 is up 4.99% since the beginning of 2006.

The Alternative Investment Management Association (AIMA), has launched a Cayman Islands Chapter. The new Chapter has been formed both at the request of the industry and with the strong backing of the Cayman Island regulator, the Cayman Islands Monetary Authority and the Government’s Portfolio of Finance & Economics.

Christopher Fawcett, Chairman of AIMA said: "This is a notable and natural milestone, and a signal of AIMA’s growing influence worldwide. Cayman is an integral part of the hedge fund industry, with the majority of hedge funds globally domiciled there".

The Cayman Islands becomes AIMA’s seventh Chapter worldwide after Australia, Canada, Hong Kong, Japan, Singapore and South Africa. AIMA now has over 1,000 corporate members in 46 countries.

Gary Linford, Head of Investment & Securities Division for the Cayman Islands Monetary Authority commented: "With the wealth of knowledge that sits in the Cayman Islands, this new AIMA Chapter will provide the ideal platform for the Cayman hedge fund industry to make a more public contribution to the global hedge fund debate".

The Chairman and executive that will lead the new AIMA Cayman Chapter for the next two years are:
Chairman - Andy Stepaniuk, KPMG
Deputy Chairman  - Mark Lewis, Walkers
Legal Counsel/Regulation & Tax - Henry Harford, Maples and Calder
Education & Research - Valia Theodoraki, CSX
Media & Communications - Alun Davies, GLG

While Cayman is now the domicile of choice for offshore hedge funds, Bermuda remains the OFC with more hedge fund administrators, and AIMA may well also seek to establish a Chapter in Bermuda.

The FT reports that, in testimony to the Senate banking committee on Tuesday, Christopher Cox, SEC chairman, said the regulator was using registration data to determine the scope of its jurisdiction to regulate the funds. "We’re also training our inspectors specifically for the purpose of understanding how to inspect hedge funds," he said. "This is a new emphasis for the commission. We’re devoting significant resources to it."

Mr Cox said 2,400 investment advisers had registered with the SEC by the February deadline, covering more than 11,500 hedge funds with assets of almost $2,000bn. About half of those registered had done so before the requirement took effect.

As many hedge fund managers feared, the SEC are using their inspections of hedge funds as the training ground for their inspectors. Some managers are already reporting long arduous inspections and a raft of hedge fund 101 questions from inexperienced SEC staff.

The smart play seems to have been to hold off on registration for now (using the 2 year lock-up exemption), while the SEC gets itself up to speed.

Update: The Financial News reports that Citadel, Soros Fund Management, Tudor Investment Corporation, Cerberus, Atticus, Moore Capital Management and SAC Capital Partners - that run a total of $68bn of assets between them - are among the many hedge funds that have chosen not to register with the SEC. GLG, the $13bn London hedge fund manager fined by the UK Financial Services Authority in March, also failed to register. A total of 26 of the largest 100 firms have chosen not to sign up with the SEC - representing $168bn of assets or at least 11% of the hedge fund industry, estimated at between $1.2 trillion and $1.5 trillion of assets.

Bloomberg reports that Man Group Plc's US brokerage and seven of its employees are being sued for fraud and racketeering by a court-appointed receiver seeking to recoup investor assets lost in the collapse of a Philadelphia Alternative Asset Management.

Man Financial was a broker for the Philadelphia hedge fund, which imploded last year after the Commodity Futures Trading Commission claimed it concealed more than $140 million in trading losses. Man Financial is accused of violating the Commodity Exchange Act and the Racketeer Influenced and Corrupt Organizations Act, or RICO, by letting the fund hide its losses in a brokerage account. The court-appointed receiver alledges that Man let Philadelphia fund's manager, Paul Eustace, shift losing trades to an account that wasn't shown to investors.

Paul Eustace used to trade with Trout Trading in Bermuda but is now based in Oakville, Ontario, Canada.

Update: The Scotsman reports that Man Financial Inc., the US arm of the investment firm Man Group Plc , said it will "vigorously defend itself". The article reports that Man Financial said in a statement that it (MFI) "regards the allegations to be outrageous and spurious."

A survey of senior tax executives in 50 large UK-based companies, including representatives from the FTSE 100, FTSE 250 and large subsidiaries of foreign parent companies, carried out by KPMG, the professional services firms in January and February this year, found that 54% placed Ireland in the top three countries for tax competitiveness, with 50% choosing the Netherlands.

Luxembourg attracted the vote of 32% of the respondents, while the UK polled 14%. Belgium and Spain both scored 4% while France and Germany received no votes.
The majority (two-thirds) of the respondents expressed the view that taxation was a consideration when deciding where to locate operations, and over 70% said that tax issues have become more important for international business planning over the past two years.

However, the report states that it is the clarity and simplicity of a country's tax system, rather than its tax rates, which appears to be the deciding factor for multinational firms. Only 68% of companies looked for low tax rates, compared with 88% which looked for clarity of interpretation of tax legislation and 84% which looked for consistency in tax-related judgements.

This is evidenced by the fact that corporate tax rates in both the Netherlands and in Luxembourg are (marginally) higher than in the UK, at 31.5% and 30.4% respectively. However, both countries are considered to benefit from a more stable and predictable tax regime than companies experience in the UK.

Meanwhile, Ireland combines a tax system famed for its simplicity with a corporate tax rate of only 12.5%.

Lipper Fitzrovia’s latest analysis of the Luxembourg funds industry shows the third year of double digit growth in total net assets (both Euro and US$) for all domiciled collective investment funds, rising by 20% to US$1,797.2 billion (E1,527.6 billion) at year end 2005, up from US$1,500.3 billion (E1,103.8 billion) in 2004.

The 12th annual Luxembourg Fund Encyclopaedia highlights that the total number of funds and subfunds rose from 7,777 to 8,434. The number of equity funds increased to 2,997 from 2,909 - reversing the trend of the previous two years when numbers declined. Assets invested in equity funds rose for the third year running, increasing 36% to US$ 683.2 billion.

There was a small increase in fund numbers across the other main asset classes, along with a similar growth in assets, apart from cash funds which experienced a slight reduction in assets. Alternative investment funds (primarily hedge funds) continue to thrive with assets of US$ 27.8 billion, up from US$18.7 billion last year (excluding funds of hedge funds).

221 global funds of funds were launched in 2005, making these the most popular type of fund to be launched - as per the previous two years. They also attracted the largest share of investment into newly-launched funds, taking US$ 23.1 billion over the year.

Hong Kong’s banking sector performed strongly last year, with retail banks’ aggregate pre-tax operating profits surging 8.2% on 2004. But continued competition and cost pressure will likely make the operating environment challenging this year, according to Monetary Authority Chief Executive Joseph Yam.

In the Authority’s 2005 annual report, Mr Yam explained that the exchange and money markets were largely stable during the year, despite massive fund flows arising from speculation about revaluation of the renminbi and initial public offerings in the stock market.

Ireland’s Business Regulation Forum, established by Minister for Enterprise, Trade and Employment, Micheál Martin in November 2005 to examine regulatory issues as they impact on business and competitiveness, is now inviting views, comments or submissions from individual consumers, companies, organisations and interest groups concerning which regulations they feel could be improved upon.

Comments and evidence on what areas of regulation impose the largest avoidable and unnecessary burden on business, including the extent of regulation, the burden it imposes on business, and the effects of that burden, are being sought.

"The impact of regulation on business can be significant. Hundreds of regulations impact on all our business lives every day, from health and safety legislation to tax obligations", Minister Martin explained, continuing:

"Most of these are necessary to allow society to run smoothly and to sustain the high standards we now expect. However, it may be that some of them have evolved in such a way as to have become difficult to comply with or hard to understand, I would therefore encourage everyone including members of the public to become actively involved in the submission process."

"The forum is not seeking to reduce regulation per se. It is very clear that regulations, for the most part, exist for good reasons. The benefits of regulation can include: protecting consumers, preventing the abuse of monopoly power; encouraging optimal resource allocation by improving the functioning of markets; and maintaining standards, such as Health and Safety. The Business Regulation Forum will examine if the same benefits could be achieved in a more efficient and effective manner."

United Overseas Bank's (UOB) head of treasury research, Jimmy Koh is reported in the Singapore Business Times as stating that "the global environment is stable and resilient" and the outlook for Asia is also positive.

He says Asia will receive fund flows from the Middle East as investors there are "looking to park money and not for major gains". He says: "The surge in gold, commodity and crude oil prices is reflection of an economy flush with liquidity".

UOB’s take on the Singapore economy is that employment creation is finally happening, economic restructuring is bearing fruit in the service sector and the economy could surprise on the upside over the next few years. Mr Koh sees Singapore becoming a major event organisation centre, enjoying growth in tourism because of budget airlines. He also sees Singapore growing as a wealth management centre.

UOB is looking at real GDP growth of 6.1 per cent for 2006. Its projection is at the top end of official forecast of 4-6 per cent growth this year, down from last year's growth rate of 6.4 per cent.  UOB's projection is the same as the latest projection from the Monetary Authority of Singapore, which is seen as a more sustainable pace after nine straight quarters of expansion.

Bank of China (BOC), the mainland’s second-largest bank, has been forced by Hong Kong Exchanges & Clearing to boost the size of its initial public offering (IPO) to 20 per cent of its share capital in a deal that is likely to raise US$7 billion.

BOC originally planned a float of 16 per cent of its enlarged share capital with a 10 per cent stake being taken up by a block of investors, including UBS, Temasek Holdings and the mainland's National Social Security Fund. The original share sale structure would have left less than half the number of shares to be sold to institutional and retail investors, which was rejected by the Hong Kong regulator.

To comply with the requirements of the HK Exchange’s listing committee, BOC will sell more H shares and reduce the number of shares made available in a potential listing in the mainland at a later date.

Hong Kong Exchanges and Clearing chairman Charles Lee Yeh-kwong will retire in April after almost 20 years at the exchange. Mr Lee joined the exchange as a council member in 1988.

There will be then be elections for the Board to replace several members. The 13-member HKEx board is formed by six shareholder-elected directors, six government-appointed directors and the chief executive officer, Paul Chow Man-yiu. Three of the government-appointed members are stepping down, having reached the end of their six-year terms, namely: chairman Charles Lee Yeh-kwong; Great Eagle Holdings deputy chairman and managing director Lo Ka-shui, and Goldman Sachs (Asia) vice-chairman Tim Freshwater.

The SCMP reports that sources say Executive Councillor and Hong Kong Jockey Club chairman Ronald Arculli is the government's choice to succeed Mr Lee, while fellow Exco member Laura Cha Shih May-lung and listing committee chairman Moses Cheng Mo-chi are tipped to take the other two seats.

Before the establishment of the HKEx in March 2000, the former stock exchange was dominated by stockbrokers, with 18 of the 31 council members elected from within the brokerage ranks. But government instituted reform turned the brokers’ seats into shares in the HKEx and removed their control.

The South China Morning Post reports that the Hong Kong government is expected to get the approval from legislators in June for the legal changes required to split the role of the Securities and Futures Commission (SFC) chairmanship into a non-executive chairman and a chief executive. Current SFC chairman Martin Wheatley is expected to become the chief executive handling daily operations, keeping his annual pay package of about $6 million, while the government has to find a non-executive chairman who will receive $702,000 a year. The SCMP reports that the government is still searching for a suitable candidate.

Portus Alternative Asset Management Inc. co-founders Boaz Manor and Michael Mendelson have now been accused by Canadian regulators of lying to investors as the hedge fund collapsed last year. The Ontario Securities Commission (OSC) charged both men on April 20 with failing to act in good faith with clients. Mendelson also was charged with unregistered trading and issuing securities without filing a prospectus.

The charges were the first for Mendelson, whose lawyer Joyce Harris said in November that he was close to settling the good-faith claim with the OSC. Manor was charged in October with misleading OSC staff and unregistered trading. Portus, founded in 2002, attracted about C$800 million ($707 million) from around 26,000 investors before it went under.

Mendelson and Manor face maximum penalties of C$5 million and five years in jail. A court hearing hasn’t been scheduled yet.

Manor left for Israel before the OSC seized Portus’s assets in March 2005. KPMG LLP, the fund’s trustee, is trying to find as much as $18 million that was missing from the accounts, including $8.8 million of diamonds Manor arranged to buy last year in Hong Kong.

Although the Cayman Islands are often classified as a “tax haven”, they do raise government revenue through a number of mechanisms, including direct taxes in the form of “fees” in both the offshore and domestic sectors.

In the latest Budget statement the Financial Secretary, Kenneth Jefferson, has announced that a number of these fees will be increased with effect from 1st July.

The fee for issuing Tax Undertaking Certificates to Exempted Companies, Exempted Limited Partnerships and Exempted Trusts, which guarantee that offshore entities will be exempt from any future taxation introduced in the Cayman Islands for a period of 30 or 50 years, will be increased from $150 to $500. This increase is expected to raise $2.1 million in additional revenue during the 2006/7 financial year.

The new revenue measures also incorporate increases to: Captive Insurance Licences; external Insurer Licences; Restricted and Unrestricted Trust licence application fees and the Annual Licence Fee for Restricted Trusts. These fee increases are expected to generate additional revenue of $0.4 million during the 2006/7 financial year.

Annual fees for Exempted Trusts will be increased from $100 to $500 and this is expected to yield a further $0.3 million during the 2006/7 financial year.

There will also be an increase in the fees charged by the General Registry. The most significant change pertains to the issuance of Certificates in respect of companies listed on the Companies Registry. The fee for obtaining a Certificate of Good Standing will increase from $41 to $82. This is expected to produce extra revenue of $2.6 million in 2006/7.

Various Certification and Document fees in respect of partnerships will be increased from $50 to $82. This proposed change is expected to produce $0.3 million of additional revenue in 2006/7.