The Financial Times has reported that the Bank of Bermuda is part of a group of investors who yesterday filed a lawsuit against Beacon Hill Asset Management, a hedge fund that collapsed in October after losing more than $400m on mortgage-backed securities.

It was later charged by the Securities and Exchange Commission for misleading investors over the extent of losses.

A spokesperson for the Bank of Bermuda clarified yesterday that the Bank of Bermuda does not have a beneficial interest in the hedge fund but their Luxembourg office was acting as a nominee on behalf of a client. The complaint, filed in a Manhattan federal court, claims that Beacon Hill, based in Summit, New Jersey, and Asset Alliance, its controlling shareholder, concealed losses and misled investors.

The investor group held $79m in assets in three Beacon Hill funds - Bristol Fund Ltd, Safe Harbor LP and Milestone Plus Partners LP. Beacon Hill was one of the largest hedge funds in the mortgage-backed securities market. Lauren Foster, New York