EUROPE: European Parliament calls for improved hedge fund regulation

Tuesday September 9 2008

The European Parliament’s Committee for Economic and Monetary Affairs has voted in favour of a resolution calling for more stringent regulations on hedge funds and private equity funds.

The report, drafted by former Danish Prime Minister Poul Nyrup Rasmussen, asks for a series of legislative measures including asking the European Commission to present a legislative proposal by the end of the year to regulate hedge funds and private equity funds, based on the principles agreed by the MEPs.

The report also calls for more transparency of so-called ’alternative’ funds, which MEPs said should be required to disclose their debt exposure and their investment strategies.

The committee further asks for measures to be introduced where needed to avoid unreasonable asset stripping of companies taken over by private investors or hedge funds. Capital rules should ensure the level of leverage is sustainable for both the private equity firms and the target company and there should be no unfair discrimination between different types of fund using similar strategies.

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