Britannia Radio

This socialist proposal is put forward to further socialist control  
of the dynamic capitalism which has brought Europe untold benefits in  
the last 60 years.  Not one  bank failure can be attributed to either  
hedge funds or - especially - private equity.  If one wants to kill  
entrepreneurial activity this is the way to set about it.  Bank  
failures are entirely due to the failure of governments to do their  
historic duty of controlling credit and money supply along with the  
removal of previous controls separating retail banking from  
investment banking. The politicians are eager to blame the bankers  
but it was they that let the standards slip.

This shows the critical dangers oof allowing politicians, especially  
socialist ones, anywhere near the controls of the world’s financial  
system of which do not have the first understanding. It needs the pro- 
active attention of our government before the EU can get its claws  
round the nation’s windpipe and throttle us.

xxxxxxxxxxxxxx  cs
================================
TELEGRAPH                        30.4.09
UK and Europe heading for rift over regulation
The European Commission has been accused of launching a "blatant  
attack" on London's financial services industry with proposals to  
regulate hedge funds and private equity firms.

    By Louise Armitstead

The European Commission has been accused of launching a "blatant  
attack" on London's financial services industry with proposals to  
regulate hedge funds and private equity firms.

The directive looks set to open a deep divide between the UK – where  
over 80pc of the alternative investment industry is based – and the  
rest of Europe.

The proposals include radical new rules ranging from fund raising to  
capital requirements.

The directive is particularly tough on non-European fund operators.  
It stipulates that only funds domiciled in Europe can be marketed in  
the EU. An estimated 90pc of hedge funds are domiciled off-shore  
while the industry is also dominated by Amercian players.

Antonio Borges, chairman of the Hedge Fund Standards Board, said:  
"This is a blatant attack on the UK and US financial systems by  
continental countries that neither have a tradition of alternative  
investments nor a proper understanding of them. With the European  
elections coming up this is clearly politicial."

John Whittaker, partner at Simmons & Simmons said: "This is a deeply  
protectionist directive and damaging for the UK which attracts the  
international players."

But in Europe the directive was criticised for not going far enough.  
Poul Nyrup Rasmussen, a Danish MEP and president of the Party of  
European Socialists who led the parliamentary pressure for the new  
rules, said the commission had come forward with regulation that was  
"so light, it's flyweight". He said: "Private equity can pop the  
champagne today but they may not be celebrating for long as we will  
not accept such an ineffective regulation."

Charlie McCreevy, EU commissioner, said the directive was necessary  
to address the concerns following the financial crisis.
He said: "There is now a global consensus – as expressed by the G20  
leaders – over the need for closer regulatory engagement with this  
sector. In particular, it is essential that regulators have the  
information and tools necessary to conduct effective macro-prudential  
oversight."

The directive proposes imposing "demanding regulatory standards" on  
all managers with funds over the value of €100m (£89m). The  
regulations will also extend to "all major sources of risks in the  
alternative investment value chain" including "key service  
providers ... depositaries and administrators". The directive says  
they will be "subject to robust regulatory standards"
.
The funds will also have to demonstrate standards of governance.
Florence Lombard, executive director of the Alternative Investment  
Management Association, said: "This directive is not a proportionate  
regulatory response to any of the identified causes of the current  
crisis."
She said that all of the major reports concluded that neither hedge  
funds nor private equity caused the crisis.

John Cridland, deputy director general of the CBI, said: "It is of  
deep concern to us, just a week after Alistair Darling said that we  
must have a business-led recovery, to push away the richest and most  
exciting investment professionals from this country towards others  
that want them more."
================================
FINANCIAL TIMES                 30.4.09
Hedge fund managers warn on EU plans

By Brooke Masters and Martin Arnold in London and Nikki Tait in Brussels

Hedge fund managers and private equity bosses rounded on European  
Commission plans for sweeping new regulation of their industries,  
warning that proposals published on Wednesday in Brussels threatened  
to cripple businesses that managed €2,000bn of assets.

There were fears among fund managers in the UK, home to many  
alternative investment managers, that the draft legislation, if  
implemented, would prove unworkable and drive business away from the  
City of London.

Jonathan Russell, chairman of the European Venture Capital  
Association, called the proposed EU directive “disproportionate,  
inappropriate and anti-competitive”.

The Commission’s proposals, drawn up amid public and political anger  
over the risks taken by some financial institutions that led to the  
current crisis, would require alternative fund managers, rather than  
funds themselves, to register and seek government authorisation for  
the first time. Fund managers would also have to meet reporting,  
governance and risk management standards, including minimum capital  
requirements.

Industry insiders said the costs of compliance could be prohibitive  
for small funds and were unnecessary for the protection of investors  
and from the point of view of systemic risk.

“The disclosure requirements would certainly drive the businesses  
away,” said Stuart Fraser, chairman of the regulatory and policy  
committee of the City of London. Florence Lombard, executive director  
of the Alternative Investment Management Association, which  
represents hedge funds, said “the directive contains many ill- 
considered provisions which are impractical and may prove unworkable.”

The draft law would apply to all managers of alternative investments  
that use borrowed money and control at least €100m of assets,  
covering 30 per cent of hedge fund managers and 90 per cent of hedge  
fund assets. It would also apply to private equity groups that do not  
use borrowed money in their funds if they manage minimum assets of  
€500m.

Industry officials said they saw this as an effort to force funds to  
move onshore. The proposed legislation still needs the backing of  
both the European Parliament and member states. It is unlikely to get  
that before the middle of next year at the earliest.  [But that is no  
cause for complacency and turning over and going back to sleep.  -cs]