Hedge funds have gotten a reprieve from further regulations as the European Union has officially shelved plans for additional rules governing them even while it looks to revamp the entire financial services industry in the EU. While announcing it would issue a draft in late 2007 for rules that would allow merging cross-border funds and pooling assets, the EU’s long-awaited white paper states that the commission is leaving the status quo as far as hedge funds are concerned. Debunking the myth that HFs are not regulated, Niall Bohan, the EU’s asset management commissioner, said, “We feel that in Europe the risks associated with hedge funds are well addressed by an existing patchwork of national regulations.” In the words of the EU white paper, “regulatory safeguards exist at European level to ensure that all investors – including hedge funds and private equity firms – publicly disclose their acquisitions and refrain from any abusive behavior or insider trading.” The paper went on to state that there is “a particular danger that hedge fund regulation could stifle the further development of a sector that has thrived on flexibility and a capacity to innovate.” The EU even defended “activist” investors by saying, “it should be recalled that these investors are doing no more than exercising the rights that they have earned by taking a stake in a publicly listed company.” Bohan added, “We don’t think the case has been made for us to introduce a European overlay to this system.” That doesn’t mean all alternative investments are off the hook. According to Bohan, the commission will be turning its attention to some of the newer offerings in the field, namely real estate funds, which the EU will study over the next year and a half with a report due by summer 2008.
EU Shelves Any New Hedge Fund Regs
Hedge funds have gotten a reprieve from further regulations as the European Union has officially shelved plans for additional rules governing them even while it looks to revamp the entire financial services industry in the EU.
November 16, 2006
Hedge funds have gotten a reprieve from further regulations as the European Union has officially shelved plans for additional rules governing them even while it looks to revamp the entire financial services industry in the EU. While announcing it would issue a draft in late 2007 for rules that would allow merging cross-border funds and pooling assets, the EU’s long-awaited white paper states that the commission is leaving the status quo as far as hedge funds are concerned. Debunking the myth that HFs are not regulated, Niall Bohan, the EU’s asset management commissioner, said, “We feel that in Europe the risks associated with hedge funds are well addressed by an existing patchwork of national regulations.” In the words of the EU white paper, “regulatory safeguards exist at European level to ensure that all investors – including hedge funds and private equity firms – publicly disclose their acquisitions and refrain from any abusive behavior or insider trading.” The paper went on to state that there is “a particular danger that hedge fund regulation could stifle the further development of a sector that has thrived on flexibility and a capacity to innovate.” The EU even defended “activist” investors by saying, “it should be recalled that these investors are doing no more than exercising the rights that they have earned by taking a stake in a publicly listed company.” Bohan added, “We don’t think the case has been made for us to introduce a European overlay to this system.” That doesn’t mean all alternative investments are off the hook. According to Bohan, the commission will be turning its attention to some of the newer offerings in the field, namely real estate funds, which the EU will study over the next year and a half with a report due by summer 2008.
