Government has successfully plugged the leak of Bermuda investment funds leaving for rival domiciles to escape falling under new European investor rules, Finance Minister Paula Cox said.

Ms Cox, in an interview with last Thursday, said a December measure exempting up to 800 funds from regulation by the Bermuda Monetary Authority has served to ?slow?, if not stop altogether, an exodus that began last year.

And she said the regulatory exemption doesn?t raise any risks that funds will do away with normal investor protections. Only funds that cater to a sophisticated clientele ? investors with enough money to take bigger than normal risks ? can choose not to be regulated.

So far, eight funds have signed up for the exemption ? four existing funds and four new funds, a Bermuda Monetary Authority official said yesterday. And no funds have quit the Island since the exemption was put in place in December.

Exempted funds still have to meet certain criteria including appointing a recognised auditor and fund administrator, Ms Cox said. ?You still have protection for the investor base.?

Through December, some 25 funds quit the Island, sapping about $6 billion, or three percent of the $178.58 billion Bermuda funds hold under management. The firms left after growing concerned that being based in Bermuda could put their European clients, when paid through Swiss agents, at threat of having to comply with new Swiss rules tied to last July?s EU Savings Directive. Swiss officials later agreed that Bermuda funds exempted from regulation fall outside the scope of their rules.

The EU Savings directive provides a mechanism for member countries, as well as third-party countries aligned with the directive, to share information on the savings income of EU citizens. In limited cases, investor funds can be withheld for tax purposes.