with the rapidly growing investment management industry, and one asset manager yesterday echoed the call for regulations and supervision and argued the need for Government to licence such firms in the public interest.

Just days after The Royal Gazette revealed the Bermuda Monetary Authority had proposed new regulations for investment companies, the president of Bermuda Asset Management, and director of Gulf Stream Securities, Mr. E.T. (Bob) Richards urged Government to act swiftly to not just supervise the industry and protect the public's money, but to also protect the industry from foreign competition.

Mr. Richards, speaking at Hamilton Rotary, said exchange controls, including the ten percent investment tax, the $25,000 overseas investment limit and the interest rate ceilings limited local investment opportunity. For about ten years since 1972, he said, savers were penalised by being forced to collect interest that was lower than the rate of inflation.

The system resulted in structural economic distortions, he argued, and Bermuda became a country of spendthrifts, with the only local asset retaining value in times of high inflation being real estate. The excess demand drove the prices of real estate up by 20 to 25 percent annually, he said.

And, said Mr. Richards: "Finance for such purchases was very restrictive because the banks were allowed to ration money to their own advantage. The system virtually legislated extraordinary bank profits.'' While he applauded the deregulation of exchange control as a necessary step toward a freer marketplace, he said regulation is a necessity in the investment services sector because of the global nature of the business, the speed of communications and the intrinsic trust that clients have to have to deal with their brokers, sometimes with just verbal instructions.

"Nowhere else,'' he said, "is the struggle between fear and greed more pronounced than in the investment business. These features make the investment business uniquely susceptible to abuse.'' He said the relaxation of exchange controls is further blurring distinctions between foreign firms set up here as offshore companies and local companies.

He said the investment community was clamouring to get a piece of the $4 billion in capital that flooded into the Bermuda insurance sector last year.

He argued that as an indigenous industry, the investment services sector should be protected from exposure to foreign domination.

He had criticism for a Government policy that would continue to promote industries such as exempted insurance management companies in which there was little or no hope for local entrepreneurs to directly participate. He warned against allowing larger, better capitalised foreign firms being allowed to take over the investment industry, advocating that Bermudians must develop the sector themselves.

"...Our industry is still emerging, and fragile; in need of understanding, encouragement and protection from Government. There are laws on the books which are being violated, and are not being enforced.''