How Dodd-Frank and AIFM will rein in private equity

Author: | Published: 3 Dec 2010

The US and Europe have recently introduced legislation that will have a significant impact on the private-equity industry. The European Parliament finally adopted the Alternative Investment Fund Managers Directive (the Directive) on November 11 2010 with one of the drivers being a desire, in some quarters, to rein in the activities of private-equity funds.

The Dodd-Frank Wall Street Reform and Consumer Protection Act 2010 (the Act), was passed in the US on July 21 2010 and has a wider aim of addressing some of the practices that led to, and restore public confidence following, the 2008 financial crisis.

There are a number of key areas of the Directive and the Act that are likely to affect private equity funds and their managers.

AIFM Directive

The Directive aims to introduce harmonised regulation throughout Europe for all alternative investment fund managers not already subject to EU regulation (ie everyone except Ucits managers).