Bear Stearns Takes Refuge in Caribbean

Bankrupt hedge funds ticketed for liquidation in friendly Caymans
By Jonas Oransky,  Newser Staff
Posted Aug 7, 2007 8:13 PM CDT
A specialist on the floor of the New York Stock Exchange keeps his eyes on three monitors late on a down trading day, Wednesday, July 18, 2007. Stocks retreated as investors reacted uneasily to Federal...   (Associated Press)
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(Newser) – Bear Stearns, faced with the implosion of two hedge funds worth more than $1 billion, has decided to liquidate them in the Cayman Islands—a move that will give creditors and investors less access to their money.  Bloomberg forecasts a court battle over the tactic, which an analyst said will yield creditors and investors “a pittance on the dollar.”

Though their assets are stateside, the two funds that collapsed are incorporated in the Caymans. Three out of four hedge funds are incorporated somewhere in the Caribbean, Bloomberg estimates. The case will be watched closely, as it may establish a precedent for other failed funds.