IFLR 1000
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The election of Barack Obama as US president stirs mixed feelings among Bermudian lawyers, with many viewing his aggressive stance on offshore jurisdictions as cause for disappointment. "From an emotional standpoint, we were all pleased," says one practitioner, "but his policies are not very Bermuda-friendly....

The election of Barack Obama as US president stirs mixed feelings among Bermudian lawyers, with many viewing his aggressive stance on offshore jurisdictions as cause for disappointment. "From an emotional standpoint, we were all pleased," says one practitioner, "but his policies are not very Bermuda-friendly." Though regulatory reform is still only theoretical, calls from the G20 nations to enhance transactional transparency in offshore centres like Bermuda have gained momentum in the wake of the global financial crisis.

The abundance of insurance-related activity generated annually in Bermuda helps the island counteract the negative image associated with other offshore jurisdictions. Over several decades the Bermuda government has established information treaties with other nations, and the work in fostering these relations has paid off – the OECD (Organisation for Economic Co-operation and Development) has included Bermuda on the so-called white list of co-operative offshore jurisdictions.

In June 2009, the government of Bermuda signed a TIEA (Tax Information Exchange Agreement) with the Netherlands – the island nation's 12th such international agreement. The agreement was the catalyst for Bermuda's promotion from grey to white, in line with the G20's 12-agreement quota. This OECD re-grading has been backed up by a TIEA signed with Germany in July, and there are negotiations underway for another agreement between Bermuda and Canada.

Financial lawyers allude to the unfortunate double punch of the Madoff and Stanford Ponzi schemes that victimised many hedge funds in Bermuda. As the scope of these operations unfolds in US courtrooms, the number of victims and the full extent of their losses are still uncertain.

A lesser-known but more locally-impacting scheme involves Thomas Petters of Petters Group Worldwide, a fund involved in an alleged Ponzi operation to the tune of $3 billion. In Bermuda, the law division of Ernst & Young is embroiled in a class-action lawsuit undertaken by investors on the basis of the firm's failure to catch accounting discrepancies in audits performed for investors in Petters' fund. The case has sent ripples throughout the investment fund community and exposed the need for law firms to be thorough on matters of due diligence.