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From Kirsten Bischoff, Opalesque New York:
The global financial crisis certainly took its toll on the performance of hedge funds, but market stress also caused ripple effects into other areas that managers had never really considered to be problem areas before. Legal concerns became an enormous stress, especially for those managers who felt they needed to gate assets. On multiple occasions we heard about angry investors that needed liquidity and felt managers were not justified in suspending redemptions or gating. In many cases these quickly dissolved into legal disputes. The steep rise in fund-related disputes throughout 2008 and 2009 meant that many managers received crash courses in the intricacies of the laws of the jurisdictions of their funds (Caymans, Ireland, Jersey, Delaware, etc).
Cayman, which is widely considered the "industry standard" for hedge fund jurisdiction is facing stronger competition. Especially from popular European jurisdictions that will benefit from the protectionist aspects of the AIFM Directive and that will likely be the jurisdiction of choice for more European funds.
However, just as Cayman has set the pace for hedge fund jurisdictions in the past, it continues to evolve and improve itself in order to maintain that lead - and one of the most recent areas for this evolution has been with the court system that hears hedge fund legal disputes.
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