Commenting on the draft Directive on Alternative Investment Fund Managers, PES President Poul Nyrup Rasmussen said “This directive has more holes than a Swiss cheese.”
Rasmussen said “Commission President Barroso has broken his promise to the European Parliament to bring forward regulation of hedge funds and private equity. What we have today is regulation that is inadequate and only applies to fund managers. The funds themselves have escaped regulation for the moment.”
“Just when you thought the greed and excessive risk-taking of the speculators had finally discredited light touch regulation of financial markets, the European Commission has come forward with super-light touch regulation. It’s so light it’s fly-weight.”
The Commission’s failure to come forward with proper regulation of hedge funds and private equity is a snub to the European Parliament which passed a report last September with a large cross-party majority calling for very specific regulation of hedge funds and private equity. This report was followed up with no less than three joint letters to Commission President Barroso from Poul Nyrup Rasmussen, Martin Schulz and Pervenche Beres. The most recent letter, sent earlier this month, tells Barroso “We demand that you address the shortcomings of this proposal for a directive before it is agreed by the Commission, and that you do so with sufficient speed to present the proposal before the European elections.”
Rasmussen said today “Barroso has ignored the wishes of the Parliament, abandoned the commitments he made to the Parliament and dismissed the warnings of European Socialists. He is making a serious miscalculation.”
Rasmussen declared that the failure to bring forward regulation of hedge funds and private equity as demanded by – and subsequently promised to - the European Parliament will have political consequences for the Commission President’s hopes of a second term. “Barroso pretends to be the candidate for all parties but he has caved in to the demands of industry and their friends in the Commission.”
“Commissioner McCreevy would have us think that this is a consensus. In his world, it seems, ‘consensus’ is only what private equity and hedge funds want, not what is in the interests of the real companies and working people.”
Last week heads of European election lists from Party of European Socialists member parties meeting in Toulouse agreed 7 steps to be taken in the first 100 days following the European elections including “Effective regulation and supervision of the financial markets, covering all financial actors and instruments, including hedge funds and private equity.”
Commenting on the €500 million threshold for private equity Rasmussen said “I understand why Mr. McCreevy and his friends in the City of London and other financial capitals are smiling. Private equity can pop the champagne today but they may not be celebrating for long as we will not accept such an ineffective regulation.”
Poul Nyrup Rasmussen has identified 10 big holes in proposal for a directive:
1. The proposal covers only EU-based fund managers (not the funds themselves, and not managers based elsewhere)
2. The registration proposed is a formality with no real requirements
3. It sets a threshold of €100 million for hedge funds and €500 million for private equity, which will herald a golden age for fund managers and “consultants” to collude in circumventing the threshold.
4. The capital requirements are miniscule (calculated as 0.02%)
5. Transparency is inadequate in terms of information to be provided and frequency of reporting
6. There is no real disclosure of portfolio companies
7. Nothing on market disruption by non-EU funds
8. No regulation of naked short-selling
9. No specific protection of institutional investors
10. Nothing on tax evasion
For more information, consult:
Letters from Rasmussen, Schulz and Bères
- April
- January
- December
PES Heads of list declaration from Toulouse last week
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
