The Guardian has run a spoof article entitled "How to set up a hedge fund". Well it would be a joke, except there second point is "Get a brass plaque in the Cayman Islands ", under which they say:

Nearly all hedge funds are legally registered in tax havens to avoid both the taxman and to skirt regulatory hurdles - the sunny climes of the Caymans and Bermuda are particularly popular. Theoretically, a fund registered in London would have to register with the Financial Services Authority, but this has never actually happened. An FSA spokeswoman says: "Nobody ever registers hedge funds in the UK. If somebody did, we'd be scratching our heads over how to deal with it. We'd have to devise something."

WHAT? The FSA has no idea how to regulate a UK hedge fund?

I'd love to believe that's not true. I have a strong feeling it's not.

And yet, as we all know substantial numbers of hedge funds are here in the UK. They're run from Mayfair. And the Cayman charade is just that, as has been proven to be the case with the liquidation of some Bear Stearns funds.

So why isn't the UK insisting on regulating these funds, because we sure as heck know that Cayman is not.