Bermuda is losing out to the Caymans in attracting business from the rapidly growing hedge fund business, a leading accountant has claimed.

Joel Press, a senior partner with Ernst & Young in New York and head of the top four accounting firm?s global hedge fund practice, told about 100 industry professionals attending a panel discussion on the future of the industry yesterday, that the Cayman Islands ? not Bermuda ? was raking in new hedge fund business.

Chairman of the Bermuda Monetary Authority, Cheryl Lister, who was also participating in the discussion, quickly moved to defend the Island as having a better reputation than the Caymans for regulation of these kinds of investment schemes.

She added that she and others at the Authority were actively speaking to industry participants to market Bermuda and ensure the perception and the reality of what the Island has to offer is known in hedge fund circles.

But Mr. Press, a 36-year veteran of the business, countered that talk.

The reality is that Bermuda is not getting the business, he said.

As an example, he told the group that a number of start-up hedge funds ? with $7 billion collectively in assets under management ? had just recently chosen Caymans as their domicile.

?You can talk about perception, but if you do not get a ground swell of investors (to push to bring hedge funds to Bermuda), you will soon lose out,? he said.

Mr. Press said that lawyers advising hedge funds were the ones who really had the power to sway opinions on where to set up ? and that Bermuda was not on their radar.

?No one is waving a flag out there for Bermuda,? he said.

He advised the Island to do more than tackle ?perceptions?.

He said Bermuda might be better off spending less time on trying to stay above the fray, so to speak, and more getting down into the fray.

Mr. Press said the Island would always get some hedge fund business, if only by virtue of its good golf courses, but if it did not get on to the hedge fund bandwagon in short order it would lose out ostensibly on all business from a sector that is projected to see its assets under management grow from $1 trillion to $2 trillion in the next five years.

Mr. Press called Bermuda ?a lovely place? but said that it had ?lost its way as a financial sector?.

He said the Island has other things going for it, for example being a leading insurance centre, but that Bermuda had lost the edge it once held when it reportedly dominated on the hedge fund side in the 1970s and 1980s.

He said the reality now is that the Caymans are capturing up to 80 percent of this kind of business, and jested that even Bermuda?s golf advantage is being undermined with that island having developed two courses and upgraded its private jet facilities.

?This is how the world goes. You have to make this adjustment if you want to get this business,? he said.

Looking at specific drawbacks keeping business from Bermuda, Mr. Press said hedge funds were not coming for several reasons.

He cited, atleast the perception, that it was costlier to set up here, took longer to incorporate and that there are greater hassles than in other domiciles with local lawyers.

?Cayman lawyers don?t try and put their own print,? on contracts, he said and he praised their efficient sign-off process.

He said other domiciles had a ?pretty cookie-cutter? legal approach, but that Bermuda lawyers often wanted to add input that really proved to be of little value.

He said regulatory approval also took longer in Bermuda than it did in the Caymans.

Mrs. Lister challenged that, again saying it could be a perception issue as Bermuda licensed, vetted and incorporated hedge funds at the same time where other domiciles, including the Caymans, attacked these tasks separately.

She said she could take up separating the process with the Finance Minister, but refuted any claim that it took longer to set up in Bermuda.

Mrs. Lister added that the Island?s strict vetting controls had put it in good stead, and that it was seeing business come in although conceding not much of it was from the US.

But Mr. Press said that the Island?s vetting procedures might be a case of overkill with hedge fund start-ups already having been vetted by lawyers and accountants before they come to the domicile.

He added that a number were also coming out of venerable institutions or led by leading business people with proven track records.

He said hedge funds would come to Bermuda, but only if lawyers advising the industry were touting the Island as a domicile for hedge funds.

?Most people would tell you they would prefer to be in Bermuda but lawyers dominate,? he said, adding one thing would be to try and swing the opinion of lawyers in New York and London.

He warned: ?If you miss this next wave, you may as well forget it.?

But, he said this would be a shame as Bermuda should be able to capture some of the business from what he called the ?most dynamic? sector around on the back of the massive growth the industry is expected to see.

During his trip to the Island, Mr. Press also led a roundtable discussion with about 20 CEOs from Bermuda-based companies interested in hedge fund investments.

A growing number of institutions are investing in hedge funds ? which generally target high-net worth individuals and institutional investors ? after they outperformed the mutual fund industry significantly in recent years.