08/04/2009
Draft directive on alternative investment fund managers "full of loopholes"
After months of telling the world that it was important treat hedge funds and private equity separately, European Commissioner McCreevy has presented a proposal for a directive to his fellow Commissioners on "Alternative Investment Fund Managers" that includes both hedge funds and private equity.
PES President Poul Nyrup Rasmussen has described the draft directive, currently on consultation within the European Commission but widely leaked to lobbyists and media, as “full of loopholes”.
Poul Nyrup Rasmussen’s major concerns about the draft directive include:
• The directive covers the managers of funds and not the funds themselves. Thus while fund managers would have to be registered in the EU, the funds would not – allowing off-shore funds to market their products without effective registration or regulation;
• The registration is a formality and does not include effective transparency on leverage, fees or investors. The frequency and quality of reporting is inadequate and transparency is insufficient both for investors and for regulators;
• Funds less than €250 million would be exempt: setting a threshold that is much too high, and allowing many funds to remain outside the directive;
• There are no ‘capital requirements’ for funds;
• Disclosure of leveraged buy outs of companies is insufficient.
Poul Nyrup Rasmussen said “Barroso and Sarkozy promised the European Parliament regulation covering private equity and hedge funds. Instead what we have so far is a weak draft directive covering only fund managers. It would be a big mistake for Barroso to allow Charlie McCreevy to present such a bad directive. I don’t believe this is what Sarkozy and Merkel had in mind when they were arguing for strong financial market regulation at the G20. I don’t understand how McCreevy thinks he is going to get away with such inadequate regulation.”
FOR MORE INFORMATION
Julian Scola, Communications Advisor - Media & Campaigns
Party of European Socialists, Rue du Trône, 98, B-1050 Brussels
Mobile +32 486 117 394
julian.scola@pes.org
