The hedge fund rules, for example, would probably apply to many offshore funds if they have any American investors.

"If the offshore funds decide they don't want that kind of regulation, they might choose to close themselves off from American investors," he said.

Wealthier individuals may be interested in offshore funds, which are not regulated by American authorities.

Some 11,000 investors had money in the offshore fund.

Switzerland manages about a third of all private and institutional offshore funds.

"We treat the offshore fund like any of our other funds" when it comes to making investment decisions, he said in a written response last week.

This has proved particularly successful in the area of offshore funds.

I am particularly unhappy that these enormous offshore funds escape our supervision and control.

His previous experience was in running separate accounts and an offshore mutual fund, which had a different structure.

But it would even be great for the City who could get their hands on all the offshore funds that are currently being underexploited.