Bermuda may not be directly affected by exposure to investments managed by Bernard Madoff, but the hedge fund industry and the offshore world will suffer as a result of the scandal.

That is the view of Jon Heckscher, executive vice-president of LOM Asset Management Ltd., who said his company does not have any direct or indirect exposure to funds or accounts managed by Mr. Madoff, including its managed accounts, funds and adviser-based accounts.

Mr. Heckscher reckons investors who have already lost confidence in the hedge fund managers will be questioning the sector's ability to regulate itself.

This comes in the wake of many financial institutions across the world revealing they have varying levels of exposure, directly and indirectly, to funds managed by Madoff.

"We believe that Bermuda will not be directly affected but the hedge fund universe will be negatively impacted once again," he said.

"Investors who have already lost confidence in the industry, will now be second guessing the industry's ability to police itself.

"I am sure the SEC and Attorney General's office in New York will be clamouring for tighter regulations immediately. This as a whole will negatively impact the offshore world."

A spokesman from Butterfield Bank said the bank and its subsidiaries had no direct exposure to securities or funds issued or managed by Bernard L Madoff Investment Securities LLC or related companies, while none of the bank's investment funds have positions in securities issued by Madoff or in funds managed by Madoff.

Capital G's spokesperson said the bank does not have any direct exposure to Madoff in its portfolio and its customers were not impacted as a result.

John Wight, president and CEO of BF&M said the insurer had no exposure to the Madoff funds, either directly or indirectly.

Jeff Conyers, CEO of First Bermuda Savings & Loans, said his company had no issues relating to Madoff exposure.