Don Seymour, just arrived in Luxembourg, isn’t very talkative. The Fundbank owner is discovering the Luxembourg ecosystem and some of its most prestigious representatives, who are introduced to him one by one: finance minister (CSV), CSSF director general , Luxembourg for Finance CEO , Bil board chair , Lalux managing director (who hosted the official inauguration in Leudelange).
Like most Anglo-Saxons who have acquired a little (or a lot) of notoriety, this global specialist in investment funds brushes aside the suggestion of a short interview and refers to an official interview request process, which he promises to look into... but another day. He rebuffs another request. Another. He explains his unfamiliarity with people and customs… then relaxes a little with the arrival of his CEO in Luxembourg, Steve David, and explains that Fundbank technology--unique on the market--can accelerate onboarding by up to 400 times.
A unique opportunity
In a former role as head of investments at the Cayman Islands Monetary Authority (1997-2000)--the Cayman CSSF--Seymour set up the regulatory framework for hedge funds in the Cayman Islands, then set up his own boutique, DMS, and then a family office. Asked why he’s keen to embark on this new project, the Fundbank owner replies: “opportunity.” “When you are confronted so regularly with the same issues by fund managers and other professionals in the sector,” he explains, “you understand that there is an opportunity.” Instead of investing in startups, helping a company to scale up or devoting more time to his already varied philanthropic activities, this expert--considered in 2015 to be one of the 50 most influential people on Wall Street in the book Transforming Wall Street: a Conscious Path for a New Future by Kim Ann Curtins--prefers to be actively involved in a bank specialising in providing technological solutions to very clearly identified frictions.
“A few years ago, Don Seymour and I…” group CEO and deputy chair Colm O’Driscoll had said on stage a few minutes earlier, “had a working lunch, if my memory serves me correctly during which we talked about how our business should evolve. And we immediately agreed that technological innovation would be paramount, the digitalisation of the entire customer interface. We then agreed on a product suite that would be developed specifically and focused on the asset management sector. Then we agreed to aim for a fundamentally low risk profile that is underpinned by our unique business model. Then we looked at jurisdictional expansion and agreed that we should target an expansion of our offices into new horizons.”
In three years, the structure is completely changing its strategy and technology stack. “That’s why Fundbank NA, our US bank headquartered in Austin, Texas, is now fully operational and has an expanding customer portfolio,” O’Driscoll continued. “That’s why we're having this party. It’s the manifestation of this original idea. But when we decided to expand our activities in Europe, we had to assess where it was going to be based. We very quickly chose Luxembourg as the headquarters for our European operations for very logical reasons: we assessed the highly respected and very stable regulatory regime that was in place here; we looked at the dynamism of the business environment and we looked at the availability of the talent pool that was available to us here. And all the interactions and experiences we’ve had over the last two years have reinforced our belief that we’ve made the right decision in this regard. And we are fully committed to becoming an integrated partner in the business ecosystem here in Luxembourg for a very long time to come. But we didn’t have a focal point here in Luxembourg until we were put in touch with Steve David.” O’Driscoll thanked David, as well as chief risk officer Francesca Messini for her commitment to meeting the regulators’ requirements.
First steps with John Parkhouse
Armed with a degree from the University of Pittsburgh (late 1980s) and the famous BBA in accounting from the University of Texas at Austin, Seymour began his career with PWC in New York. It was there, in the early 1990s, that he met a well-known figure in Luxembourg. “John Parkhouse taught me a lot about investment funds,” he said. “Is he still alive? Retired?” In June 1994, the ex-CEO of PWC Luxembourg arrived in the grand duchy for the career that we know him for, while three years later Seymour’s career took off in the Caymans, which would host more than $2trn worth of American hedge funds… until the 2008-2009 financial crisis.
Some of the hedge fund directors had a field day and--as far as we know--Seymour was not convicted in any of the three or four cases brought against him, managing each time to convince people that he had strictly applied the rules and had not crossed any red lines. But this history is probably what explains his reluctance to talk to a journalist before things had been strictly framed.
In August 2011, in a spectacular decision in the wake of the Lehman Brothers collapse, the Grand Court of the Cayman Islands made international headlines by awarding damages of $111m to two non-executive directors accused of wilful negligence or breach of duty that allegedly resulted in the collapse of the fund with losses of more than $500m.
Three months later, the FT published an apparently very detailed investigation in which the leading financial media reported that Seymour was one of the “jumbo administrators” and that, in 2006, he had held 567 mandates at the same time, mandates remunerated at up to $30,000 per mandate per year. His record in the database of the International Consortium of Investigative Journalists (ICIJ) and linked to the Paradise Papers contains “only” thirteen structures.
To journalists from the FT who ask him about independent directors with multiple mandates, the British Caymanian replies with a metaphor that having many mandates is not a problem in itself: “An independent doctor can treat about 400 patients a year. The same doctor in a hospital can treat 4,000 patients a year. For industry professionals in the Caymans, the FT missed the point and failed to take into account a context in which each independent director has human and financial resources and technology to help them carry out their duties.” In fact, this is what Seymour colleagues: “The real question is what resources the director has to carry out his task. There are obviously limits to what a single person can do, depending on the requirements of the job, but you would expect someone like me, with the significant resources of a company like DMS, to have far greater capabilities than someone working alone.”
Last year, he received the President's Impact Award at the second annual Longhorn 100 Gala in Texas, an event that honors the 100 fastest-growing businesses. He earned this recognition in part thanks to one of his major successes: the creation of Waystone, a pioneering and high-performing provider of institutional governance and compliance services for hedge funds worldwide, which was sold in 2022 for $1.3 billion.
Really launching in August
Aside from the technological dimension, the Fundbank project, which will kick off in August, also has another very important aspect. “We’re not handling funds, we’ll just be making enough loans to meet our regulatory obligations,” explains Seymour. “But we will offer all the technology to make things easier.”
“I note your interest in supporting the fastest-growing area, the hedge fund sector,” the CSSF’s director general Claude Marx, also invited on stage, said during the event. “While some are crying about the difficulty of finding banking solutions, you could soon find yourself in the luxurious situation of having too many applications to deal with!”
Citing a study to be published next week, Marx also urged the bank’s top management to reflect “on the fact that only a small percentage of board members and management are IT competent. And even those who say they are competent, sometimes I have my doubts when this is an issue that will be at the heart of future banking operations!”
An example of Luxembourg’s sense of business
The evening was also, for the uninitiated, a perfect example of “Luxembourg-style” business: the setting, the guests, the messages. At a time when some politicians and decision-makers are calling for early identification of trends and problems and rapid decision-making to remedy them or seize an opportunity, the Luxembourg financial centre has identified the problem of opening and managing bank accounts for these players, and then a player capable of providing a market solution. The Luxembourg financial community then worked hard to ensure that this solution landed here rather than in certain other European capitals, which were simultaneously capable of denigrating Luxembourg and wanting to play elbows with it.
This Thursday evening, everyone welcomed the arrival of this new player. “The name of your entity, Fundbank, is perfectly suited to Luxembourg,” explained finance minister Gilles Roth to a small audience of around a hundred people. “Two of the most important pillars of our financial centre, investment funds and banking, go together as they do, and that’s a speciality here in Luxembourg. By choosing Luxembourg, you are joining a trusted country and also a trusted ecosystem.”
“Luxembourg has always been open to the world, but we want to expand our markets even further,” Roth continued. “And I am convinced that Fundbank enriches and complements our financial centre. From what I understand, you are international, forward-looking and you build your operations around access to bank accounts for businesses. That’s certainly music to the ears of some here, especially [the MP, seated in the front row]. This is exactly the kind of business we want to see and grow. So let me welcome you to your new home and thank you for your confidence in Luxembourg. I wish you a successful launch, a lasting presence and many, many years of growth. I said earlier that the world is changing fast. But I’m convinced that this change above all brings opportunities… if we see and use these opportunities. And that’s exactly what you’re doing this evening.”
This article in French.