In a strongly worded letter to European Commission President Barroso, leading European Socialists warn “it would be a major political mistake” for the European Commission to adopt the current draft proposal for a directive on alternative investment fund managers.
PES President Poul Nyrup Rasmussen, PES Group President Martin Schulz and the Chair of the European Parliament’s Economic and Monetary Affairs Committee Pervenche Berès write that the draft – which is supposed to fulfill the commitment, made by both President Barroso and President Sarkozy when he was President of the Council, to bring forward legislation on hedge funds and private equity – is a “proposal filled with loopholes” and “ineffective”.
They point out to Barroso “Far from including hedge funds and private equity funds in new regulation, the Commission apparently proposes to regulate only fund managers and actually exclude the funds themselves from regulatory control!”
The three Socialists tell Barroso “The exclusion of the funds themselves from the proposal for a Directive is just one of a series of major loopholes which makes the proposed Directive almost worthless.”
Their letter states “We believe you are failing to fulfill the commitments you have made yourself and made by President Sarkozy during the French Presidency in debates in the European Parliament.”
It says “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” and warns that “the Party of European Socialists, and the Socialist Group in the European Parliament, consider this proposal to be of the utmost importance and will not stop in its efforts to obtain the regulation that Europe needs.”
Their letter concludes “We are watching, not for further assurances, but for implementation: appropriate regulation that really does cover hedge funds and private equity as you promised.”
Among the loopholes identified by Rasmussen, Schulz and Berès are
• The directive covers the managers of funds and not the funds themselves;
• Funds less than €250 million would be exempt: setting a threshold that is much too high, and allowing many funds to remain outside the directive;
• There are no ‘capital requirements’ for funds;
• The transparency required is inadequate towards investors and regulators, and the frequency and quality of reporting is insufficient;
• Disclosure of leveraged buy outs of companies is insufficient;
• The proposal does not cover taxation of investors, funds and managers.
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
