Nobody is happy

Author: | Published: 28 May 2009

On April 30 the European Commission published the proposal for a Directive on Alternative Investment Fund Managers (managers), which will regulate managers of so-called Alternative Investment Funds (AIFs), in particular hedge and private equity funds.

It is the culmination of years of political pressure from certain member states, political parties and interest groups that have harboured suspicions of hedge and private equity funds, often with no clear understanding of the differences between them. Because the Directive imposes a single model of regulation, measures that have been designed to ameliorate perceived risks from hedge funds will also apply to private equity.

Private equity not to blame
As described in the Commission’s “Explanatory Memorandum,” the Directive is intended to deal with perceived risks in a wide range of areas. These include “macro-prudential risks” (bank exposure to the sector and the pro-cyclical impact of “herding” and risk concentrations), “micro-prudential risks” (weaknesses in internal...