PSE issues analysis on hedge funds and private equity

29 March 2007




The European Parliament Socialist Group released a report on hedge funds and private equity. It questions the increasing dominance of hedge funds and private equity funds, and its impact on the optimal conditions for the financial market in Europe.

The decisive question is to what extent the fast growing “alternative investment industry”, Hedge Funds and Private Equity funds, conform and contribute to a positive, efficient and long-term role for the capital markets in financing the enormous amount of investment needed for a New Social Europe, the report states.

“Our view is to fully harmonise European hedge funds in order to create a unitary category of onshore funds with a common minimum investment threshold”, the report concludes. “This EU regulated regime would focus on registration of these professionals in the EU, a requirement for them to be fit and proper persons, minimum capital requirements and minimum rules on valuation of assets.”

On private equity funds, “the first regulatory step to be taken is to increase the transparency of alternative investment funds by requiring reporting at regular intervals to an appropriate regulatory authority”, the report states. “At EU level one could argue for a directive defining minimum standards for disclosure.”

“Unfortunately, we cannot expect coherent answers from the European Commission.”, the report says. “The responsible Commissioner seemed to be presuming that the major problem is too much existing regulation.”

The analysis includes detailed case-studies and sets out six concerns about the EU’s social market economy:
 


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