Hedge Funds And Private Equity: A Light In The Dark Hole Of World Finance

The European Parliament today gave its green light to EU legislation regulating hedge funds and private equity. S&D Euro MPs backed the proposal that will amongst others prevent asset-stripping by speculative funds. This is one of the key points achieved by S&D negotiators during talks with member states.

Said S&D negotiator Robert Goebbels: “Overall, whilst the legislation is not perfect it will shine a light into the dark hole of world finance.

“Thanks to our efforts we have not just new measures for private equity funds but we have given the new EU supervisory authority an additional 72 specific powers to ensure it can do its work properly.

“We now have a comprehensive piece of legislation that will take full effect over the longer term. Gradually, the same rules, the same rights and the same obligations will apply to all funds and their managers.

“To begin with, EU and third country fund managers will have to register with national supervisory authorities and disclose information on the business they plan in Europe.

“In 2018, once the European supervisory authority for markets is fully operational, fund managers can only market their funds across Europe with a European passport, provided they comply entirely with the directive.”

Said S&D Euro MP Evelyn Regner: “The directive provides for an extensive set of protective rules for investors and employees.

“This is the first time that asset-stripping has been addressed in EU legislation. For two years after a company’s takeover, no money can be handed out to investors. This will prevent immediate profits at the expense of the viability of the company concerned. It will prevent gross vulture-like behaviour of funds that cash in what money they can from companies they have just bought.”

Said S&D spokesman for economic and monetary affairs, Udo Bullmann: “The Socialists and Democrats were the first to blow the whistle on the activities of speculative funds. We warned about them well before the whole crisis blew up.

“At the time, our opponents claimed that regulation of private equity and hedge funds was not necessary, not possible and would even be counter-productive.

“We have managed to finalise a very important chapter of financial regulation. A review clause in the directive opens the way for further improvements in the future.”