Just off the tarmac at the Grand Cayman International Airport, visitors were recently greeted by colorful banners advertising the Caribbean island’s sunny offerings: waterfront seafood restaurants, tax-free shopping — and hedge funddirectors for hire.
In the last decade, as hedge funds ballooned in size and number to become a dominant force in the investing universe, directorship services have grown from a cottage industry into a big business on the Cayman Islands. Many funds run by United States money managers have their legal residence here for tax reasons. And because of a quirk in the island’s tax code, these funds must appoint a board.
As a result, dozens of operations have sprouted up on the Caymans to supply directors, from one-man bucket shops to powerhouse law firms. Directors are often Cayman-based professionals: accountants, lawyers and administrators of hedge funds.
They are rarely investors, though. Ostensibly, directors offer guidance and oversight to the funds. In return, a director is typically paid anywhere from $5,000 to $30,000 a year. With more than 9,000 funds domiciled on the tiny island, business is booming.Page 1 of 6 | Next Page