Bermuda's investment companies have been seeking to reassure their clients and maintain the reputation of the Island's financial services sector in the wake of an investigation launched into Emerald Financial Group.

LOM Asset Managment Ltd. admitted to having "lost an account or two" after news broke of the entirely unconnected investigation into Emerald.

The Bermuda Police probe was made public last week after a 45-year-old woman was arrested - reportedly the company's managing director Antoinette Bolden. On Saturday, a 46-year-old man was also arrested - reportedly company president David Bolden.

Winding-up proceedings have started against four entities owned by the group - Emerald Capital Investment Ltd., Directrade Ltd., Emerald Financial Ltd. and Emerald Investment Management Ltd.

A year ago, Emerald was advertising its Emerald High Income Fund, which offered a fully guaranteed eight percent rate of return on five-year investments of more than $100,000.

Jon Heckscher, vice-president and general manager at LOM Asset Management Ltd., admitted his company had been cost "one account or two" after the news broke, but added that the events of last week were the "exception, not the rule".

Bob Richards, managing director of Bermuda Asset Management, said a number of people had expressed concern to him about the situation, however he added that the Island's regulators seemed to be doing their job.

Mr. Heckscher said it was key to get the message out that there were still a number of bona fide investment firms operating in Bermuda and LOM was being proactive in offering its assistance to the liquidators KPMG after being contacted by concerned clients.

"I think the important thing right now that we need to get out as an industry is the things that happened to Emerald in the last week are the exception and not the rule," he said.

"I will be honest and say that has cost us an account or two. We had a couple of newer accounts that did not really know us that well and the investors had taken their money out of Morgan Stanley and Goldman Sachs to invest it with us.

"When they heard the news, they contacted us to find out about insurance coverage for their investments and put the money back into the banks.

"When you see that two people get arrested and a company has immediately been put into liquidation by the regulator, it definitely jars some nerves.

"We want to look after the reputation of Bermuda's financial sector."

Mr. Richards said that the regulation of the Island's financial services sector had changed significantly compared to 20 years ago with Bermuda advancing as a global business centre.

"It just seems to me that the regulatory authorities are doing their job," he said.

"It just shows that Bermuda has matured as a financial jurisdiction."

"We do not know the nature of the problem really - people have been arrested, but we do not know what the charges are, if any, and we know that the company has been wound up.

"But I am somewhat reassured by the orderly fashion in which the regulators seem to have approached the issue."