Financial regulator the Bermuda Monetary Authority says it is working with its US counterpart, the Securities and Exchange Commission, on the issue of Bernard Madoff "feeder funds".

Last week, London High Court judge David Kitchin said Bermuda-based fund manager Kingate Management may have "played a crucial role" in the Madoff debacle.

Madoff was last year imprisoned for 150 years, after he admitted running a Ponzi scheme that caused investors around the world to lose tens of billions of dollars.

The Kingate Global and Kingate Euro hedge funds — now in liquidation in the British Virgin Islands — were among the largest "feeder funds" to Madoff, having invested more than $1.7 billion in the fraudster's business.

A BMA spokeswoman said: "We are continuing to monitor the issue and we are liaising with the SEC as required."

Kingate itself was not regulated by the BMA. Under the Investment Funds Act 2006, some fund managers can apply for exemptions, when the fund is open to "qualified persons".

The criteria for qualified persons include being a "sophisticated" investor — deemed to have enough experience of business and the financial markets to fully understand investment risks. The list also includes "high-income" individuals, whose annual income exceeds $200,000, or theirs and their spouse's income combined is more than $300,000, and "high net worth" individuals, whose net worth exceeds $1 million.

Hedge funds elsewhere in the world have been allowed similar exemptions from regulation. But since the financial crisis, they have come under greater scrutiny.

For example, European Union leaders have proposed new rules that would regulate managers of hedge funds for the first time. The proposals would require them to register with regulators and hand over information on their trades. They will also have to set aside capital to counter risks — as banks do.

Another major Madoff investor was Fairfield Greenwich, whose Sentry funds were run from its Bermuda unit. Fairfield Greenwich is regulated by the SEC.

Early last year, the then CEO of the Bermuda Monetary Authority, Matthew Elderfield, said the BMA had contacted the SEC to offer its help with Madoff-related inquiries.

Of the funds who were major investors with Madoff, Mr. Elderfield said: "We need to assess whether all of those funds were victims or were some enablers."

Justice Kitchin made his remarks in the High Court of Justice in London last week, as he ordered London-based FIM Advisers — the firm that set up Kingate — to hand over documents requested through the court by the liquidator of Madoff's investment company.

FIM, which has an office adjacent to those of Kingate, on Front Street, is run by Carlo Grosso and Federico Ceretti.

Mr. Grosso and Mr. Ceretti "had regular calls every year with Madoff," Justice Kitchin said.

"The degree of personal contact, in the trustee's opinion, was highly unusual as Mr. Madoff tended to limit his contact with investors as much as possible."

Kingate "reaped tens of millions of US dollars in fees," the judge added. "It all suggests Kingate played a crucial role and ensured a flow of funds" to the fraud.