Welcome to episode three of our In-Perspective series and to celebrate Thanksgiving, we have a very special guest, James Lasry, who has come to the Rock via the Big Apple and is now a Partner at Hassans and the head of the firm's Funds team – just one of the many of the different hats that he wears.
In my opinion, and of course I may be biased, we have the best funds regime in continental Europe."
James, can you tell us a little about your background, what brought to you Gibraltar and what brought you to Hassans?
My mother was born in Gibraltar and she met my father at a party in Madrid when my father came from the US to Spain to do his doctorate. They met and they got married soon after and then went back to the States.
I was born in New York, I grew up there but when I was a boy they would send me to Gibraltar for the summers so I would spend the time here with my cousins and I really enjoyed it. I loved the fact that in Gibraltar you were not anonymous, you could speak to your neighbour, you would walk down the street and people would know who you are.
A little different to New York.
Yes, and I loved growing up in NY but I missed the closeness. I like the people very much and it's a gorgeous part of the world.
When I went back to New York the first time, I spent the next three months trying to convince my parents to move to Gibraltar. I wasn't very successful with that, but I came here for the summers for the next four years.
Then when I was in law school I came to Hassans as a summer intern and really enjoyed that. I was doing work for James (Levy) and for Lewis Baglietto and some of the Partners who are no longer here, on various things.
I clearly remember doing a paper on Asset Protection trusts; I didn't know what an asset was, I didn't know what trusts were and I didn't know how to protect them!
It was a very steep learning curve, but I came out with a paper which James liked and the firm actually used it. After passing the bar exam, I came to Gibraltar on vacation and James asked me if I could stay for a while. I agreed to stay for a year and I'm still here, 21 years later.
And now, of course, you are a Partner and the head of the Funds team – representing Gibraltar as a funds jurisdiction. But you also represent the US on a consular level?
Yes, the United States used to have a consular officer, an honorary consul. He was a military man, a naval commander, really nice guy. But his post was re-shuffled and they based his post out of Naples and Gibraltar didn't have an honorary consul anymore.
So, the US embassy basically asked around to see which Americans were available and asked me if I wanted to be a consular warden in Gibraltar.
I actually have a letter of appointment from the US ambassador to the UK but being a warden, we don't have any real powers, we can't certify documents but still, I'm as good as it gets in terms of whatever the United States has in Gibraltar. ��
Speaking of which, you have actually met quite a few prominent politicians, including presidents.
Yes, not so much in that context but more in the context of AmCham – the Gibraltar-American Chamber of Commerce. Juan Verde, who was Deputy Assistant Secretary for Europe and Eurasia in the United States Department of Commerce in the first Obama administration, was doing an energy deal in Spain and James Levy was on the other side of the deal. They became friends and Juan asked James, so "who runs your AmCham in Gibraltar?" And James asked, "what's an AmCham?"
Juan explained it to him and James said, "oh, I know just the guy to run it", and proposed that I set it up. So I did with the help of Marilou Guerrero and we launched it in March 2014. In June 2014 we had our first trade mission where we brought over 22 American companies to Gibraltar for a three-day trade event. They were led by Ken Salazar who, nine months before, had been the US Secretary of the Interior (in other words number five in the US Government.)
During the mission, we had a gala dinner hosted by HM GOG in St Michael's Cave with the regimental band and all the fanfare, it was very special. But I had to MC the dinner and speak between the Chief Minister and the former Secretary of the Interior; it was a bit daunting but I think it went well.
The whole point of AmCham is to promote business and cultural relations between Gibraltar and the United States, which is why we try to do these trade missions.
But also, it's part of a network of American Chambers of Commerce. To join that network you have to be accredited by the US Chamber of Commerce in Washington DC, which was the largest lobby in the United States in 2018.
It wasn't an easy thing to get accredited by them, but we had quite a bit of help and we put in a good application so finally, by the next November, we were accredited.
This meant we could become part of the regional groupings of AmCham, so we are part of the AmChams in Europe – there are about 45 AmChams – and what's amazing is that, in our AGMs, which I attend in Washington DC, we sit between AmCham Greece and AmCham Germany!
It's all done alphabetically...
Yes, which is very, very cool. In that context I've been able to meet with the President of the US Chamber of Commerce, we met the Mayor of Chicago and through the AmCham network I was invited to a conference on environmental sustainability where I had the honour of meeting Barack Obama.
It's a very interesting network, a lot of very bright and motivated people with access to the largest businesses in the United States, who are doing business in Europe.
That's the amazing thing about a place like Gibraltar – we have many of the institutions of a large country, we have a full government for 30,000 people so you can find yourself in a position where it would take you much longer, if ever, in a larger country to meet these people.
So, there are a lot of very interesting opportunities here. In a way, it's quite absurd that Gibraltar has an AmCham and China has an AmCham, you know? ��
Staying on the subject of AmCham, you held your Thanksgiving dinner recently, can you tell us a little about that?
Yes, four years ago my wife and I invited the board of AmCham to a Thanksgiving dinner and, at the dinner, we went around the table a proper turkey dinner – and, whoever wanted to, said something for which they were grateful for. And we discovered it was much more powerful than we expected it to be.
So, a few people asked, why don't we do this for our members? The next year we had a gala dinner in aid of a charity, we did it for GibSams that year. And we got a really good American speaker who had been in the advertising business...
Thanksgiving is such a great concept because giving thanks is something that everyone agrees on. Everyone agrees that it's a good thing and promoting that is completely positive and completely uncontroversial – not that I mind being controversial �� – but it's just a very positive thing to do and we also combined it with raising money for charity.
The year after we did it for St John's Ambulance and this year it was for GADS (Gibraltar Alzheimer's & Dementia Society), we were able to raise substantial amounts of money for these charities and I think people also had a really good time.
People in Gibraltar like the United States, they feel very comfortable and like the custom of Thanksgiving... I've since discovered that there are some Gibraltarians that celebrate Thanksgiving in their homes, not necessarily American, they like the concept.
And from dinners to breakfasts, let's talk about London and the Funds Breakfast at Gibraltar Week. Can you tell us a little about Gibraltar Week, which I believe used to be Gibraltar Day? ...
James Lasry (centre) at the Funds Breakfast at Gibraltar Week London, 2019.
Well, we have more and more to say, so we need more and more time to say it!
For the last ten years I have been either Deputy Chairman or Chairman of the Gibraltar Funds and Investment Association (GFIA). About 11 or 12 years ago they actually changed their constitution so that I could join, because I wasn't a financial institution, I wasn't a broker. And then a year later they asked me to become Chairman.
It's become the body that represents the funds and investments community; the brokers, the banks, the fund administrators, the lawyers, the auditors, the funds themselves – it represents that entire community before the government and the regulator.
We also do some marketing activity to try to bring the message of Gibraltar investment regimes and products to the general community. We run a lot of training because we want to make sure that we have a very informed community and a highly adept community.
So, for those of us who are not so familiar with the industry, can you first explain what funds are generally
A fund is a vehicle that allows many people to invest under common management. So, you may not know how to invest in real estate but you'd like to invest in it. One of the ways you can do that is by putting your money into a fund and the fund is managed by someone who does know how to invest.
There is an entire set of dynamics that applies to a fund, it's not just a managed account where you give your money to an individual to invest for you, it's where you put your money into a vehicle, or arrangement, where there are many people putting their money into it, generally on the same terms as you are.
Therefore, the vehicle needs to ensure that all the investors are treated fairly and that there is proper governance and that the people who are making the decisions are in fact the ones who should be making the decisions.
And what about experienced investor funds and crypto funds....?
So the Experienced Investor Fund (EIF) regime is a regime that some colleagues and I proposed to government in August 2004. And to Gibraltar's credit, by August 2005 it was legislation – which is something I have always been very proud of.
In my opinion, and of course I may be biased, but I believe that I'm correct, we have the best funds regime in continental Europe.
In other words, we have the most flexible funds regime which allows you to invest in any asset class, it allows you to launch a fund and then notify the regulator about it afterwards, but it also has all the controls in it that you would expect and want in order to ensure investor protection and protection of the reputation of the jurisdiction.
We do a lot of things that are outside of the box. For example, we created a code of conduct for funds, because our funds legislation is very flexible, it allows you to a lot of things. And so it's helpful sometimes to have guidance on how things should be done.
But there are times when that guidance is not appropriate, so the guidance should be guidance rather than legislation.
In 2014 we came out with a code of conduct for funds that gave a lot of good advice, but it was "comply or explain".
So, you don't have to follow the suggestions in the code, but if you don't you then have to explain why you didn't.
The FSC asks the EIF directors every year, please tell us all the instances where you didn't comply with the code.
Then last year, we produced a Code of Conduct for Crypto Funds, because there are issues that arise in crypto funds are different. Most issues of governance are universal; make sure that the right people are making the right decisions, make sure they have the right oversight, make sure you have the right control over your assets.
But crypto funds produce a whole new list of issues...
Is this due to the potential volatility of crypto?
It's not so much that its volatile, because you can have algorithmic trading funds or forex funds that are extremely volatile, but crypto funds raise issues that just don't exist in other funds.
They may still use the EIF regime but there are issues that the regime doesn't address or at least addresses in only a very general way.
For example, the key issue with crypto funds is how do you keep custody of your assets? With a regular fund, your money is in the bank or at the broker, so every month you get a statement from the bank or the broker and you see how much you have and you can work from that.
With crypto funds the banks don't hold cryptocurrencies so you have to go to a completely new type of organisation or arrangement that will hold those investments for you.
Because this is all very new, those organisations generally do not have all the protections and redundancies that a bank will have, so there is also a potential risk of being hacked, theft or system failure.
There are a number of issues that you need to protect against, that simply don't exist, or exist in more abstract level... Yes, your broker can go bankrupt, but that's much less likely than your digital wallet being hacked.
So, this is another piece of guidance which got off the starting blocks very quickly.
Yes, it was launched at the Funds breakfast in London last year. Last year we announced the Code of Conduct and a revision of the EIF regulations which made the regime a little bit more flexible, allowing us to have authorised directors who are not necessarily resident in Gibraltar.
One of the principals of the EIF regime is that every fund needs to have two directors who are specifically authorised as fund directors.
In the past those directors needed to be resident in Gibraltar, now only one of them needs to be resident in Gibraltar and in certain instances you can have even both resident outside of Gibraltar.
This is part of the ongoing liberalisation we did. In 2012 we revised the regulations to allow foreign fund administrators to administer Gibraltar funds. Really, we wanted to make it as competitive as possible.
So, this year we announced two more initiatives. One is the way in which we comply with Brexit. So, assuming there will be some sort of hard or medium-hard Brexit and assuming we won't have the financial services passport in the future, the funds industry will have a dual regime. We will remain with the existing Alternative Investment Fund Managers Directive, we'll keep that on the books, but only as an option.
Therefore, a fund that doesn't want to comply with that directive can just comply with our national funds legislation, in other words, the EIF regime.
It will be very much like the Channel Islands or the Caribbean jurisdictions because, if we're not going to keep the funds marketing passport that the directive affords us, there's no reason to have to comply with the directive, unless we somehow manage to become a third jurisdiction with regards to the EU, which is why we're going to keep it on the books.
Essentially there will be a dual regime where we can either choose to comply with European legislation or choose not to, and comply with our own domestic legislation.
What is it about Gibraltar, specifically, that makes it an attractive funds jurisdiction and how would you sell those advantages to somebody who is interested in investing here in Gibraltar but is still on the fence?
Well, we are a common law jurisdiction, we still have appeal to Privy Council, so our court system is very reliable.
Our tax regime is very clear and, for funds, completely unchallenged. Our regulatory regime is extremely flexible and, as I mentioned, we are the most flexible in continental Europe, especially being the only jurisdiction to allow for the pre-authorisation launch of sub-threshold funds.
In Gibraltar you can launch an experienced investor fund by preparing the documentation, setting up all the relationships that you need – the auditor, the banker, the directors, the fund administrator and so on – drafting the PPM and notifying the regulator that you've launched.
No other jurisdiction has that. Some jurisdictions have that for funds that have a licensed alternative investment fund manager, Luxembourg for example. Malta is coming up with a regime that tries to emulate Gibraltar's but our standard regime for funds is to allow us to launch the funds and, on the basis of a legal opinion and on the basis of signature and review by the fund administrator, you launch the fund and then you notify the regulator.
Afterwards, there can be a dialogue with the regulator because they read the documents but it's on their time, it's not on the client's time. So, our regime is very competitive.
Also, if you're in New York or San Francisco I would understand why you'd go to the Cayman Islands because you're in the same time zone, you're not that far, it does make sense.
But if you're in London or in Frankfurt of Geneva, I don't think setting up in the Caymans makes a lot less sense.
You're much less likely to have any substance in Cayman, you're much less likely to ever go there for a board meeting and in a world of BEPS (Base Erosion and Profit Shifting – an international anti-tax avoidance initiative) which requires you to choose the jurisdiction in which you do business based on substantive issues, rather than just based on tax benefits, this is going to become more and more important.
Which is why I think Gibraltar, for this region, will continue to be a very strong funds jurisdiction.
So... let's discuss music. You are a musician.
Yes, I play the violin.
Can you tell us a little bit about the Philharmonic and how you got involved with this?
Sure. The Gibraltar Philharmonic Society was started 21 years ago. Chris White was on the executive. At some point he left the executive but asked me to take his place because he was my team leader and he knew how much I loved music. He thought I would be a good fit, so I joined the committee.
A year later the chairman and founder wanted to retire after having done it for 11 years. He asked me to take it over and I have done that with a lot of joy and a lot of love, because we have a wonderful opportunity in that we bring really top-level professional musicians to Gibraltar. We have nine concerts a year, three of them are orchestral.
For such a small place too...
Yes, I mean the level of music that we have here, maybe not the quantity but the quality that we have, rivals Malaga, incredibly.
And sometimes we have concerts that they don't get. I remember a couple of years ago we had the concert-master of the Berlin Philharmonic. He conducted and played the solo in a National Day concert and then two weeks later I saw him on BBC doing a trio at the BBC Proms. So really top-level musicians.
And we get access to these musicians because our music director Karel Mark Chichon is a son of Gibraltar but he's done really well for himself abroad. He is the music director of the Canary Islands Symphony Orchestra which is one of the serious orchestras in Spain. They're getting huge amounts of funding from the Spanish government and he's using it very well. So, he has access to the top level of performers and when he asks them to come to Gibraltar to perform, they take him seriously, which is entirely to our benefit.
So, it is a labour of love but a constant struggle because we receive some government funding but most of it really comes from our members and our sponsors so, as businesses require you to justify every expense, we keep on having to find new members to keep afloat.
And have you any events coming up soon? This is a good opportunity to...
What have you got in store for us?
One of the things that I reinstated is that I wanted to have a children's concert where we could really teach the students about classical music and show them how an orchestra works.
So we have a new year's concert on the 7th of January and a children's' concert on the same day. It's a really fun event where the students come – it's about 45 mins to an hour, so it doesn't tax their attention span. We give them plastic instruments; we allow some of the students to conduct the orchestra, we allow other instruments to come and play with the orchestra.
And where will this be?
It will be at John Mackintosh Hall. It's really a lot of fun and it's a lovely concert. And then later that evening we have a new year's concert with a lot of the traditional repertoire, also in the John Mac.
And are there any more surprises as 2020 unrolls?
Yes, last year we started the Gibraltar proms and we're hoping to do that again in May. It's a lovely outdoor concert. We sold out in about ten days last year, so we're planning it for 2020 and it should be a very nice event.
And finally – as it is the Thankgiving season, what you are thankful for this year and also what should the people of Gibraltar, in general, feel thankful for as we enter 2020?
Great question and, in fact, it's what I discussed in my speech at last week's Thanksgiving dinner.
In spite of all the challenges that we are facing today – the rise of nationalism, Brexit, hung parliaments around the world – if you step back and look at where we are in the course of history we are probably at the best place that humanity has ever been, in terms of comfort, in terms of longevity of life, in terms of health...
200 years ago, 90% of the world lived in abject poverty. Today it's 10%. Now 10% is not acceptable, but it's a whole lot better than 90%.
That means the majority of the world has food to eat today. And to live in such a period, I think, is a huge blessing. So, I'm very grateful to be alive in this era, where we're much more conscious than we used to be, about human rights, about the environment, about freedoms. For most of history, our lifespan was about 30. Now it's 70 or even 80, depending on if you're in developed countries.
We live in a very special, very privileged time. There are fewer wars than there used to be. Now there are I think 12 wars in the world but 30 years ago there were 25 wars.
I can share some of the statistics with you, but suffice to say, we're really in a much better place than we've ever been. So, having appreciated that, I'm super grateful to be alive now.
And as for Gibraltar, it should be thankful for its special reality. We are a small community that lives together in incredible harmony and we are a can-do society.
If you had said, five years ago, that our government would have the same type of representation and connection with the UK government no one would have believed you.
Obviously, there is a whole lot to improve but, stepping back, I think we're doing a whole lot better, in a lot of ways, than the average city of thirty thousand people and that's why I'm also incredibly proud and grateful to be here.
And I think one can say that Hassans, too, is a special place. It has its quirks, like all firms, but it's a great place to be, a lot of talented people, a lot of motivated people and it's great to be part of that team.
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