Wednesday, 4 June 2008

TUAC/ETUC warning over industry lobbying against PE/hedge funds report

This is from the TUAC site. The Rasmussen report can be downloaded here (scroll down to 18th April).

On the eve of the Organisation for Economic Co-operation and Development (OECD) Ministerial Council meeting in Paris, trade union leaders from across the industrialised countries expressed deep concern at intense lobbying activities to undermine a draft European Parliament Committee's report on private equity and hedge funds [1].

Meeting under the auspice of the Trade Union Advisory Committee (TUAC) to the OECD, trade union leaders from OECD countries, including representatives of major European trade union confederations, declared their support for recommendations laid down in a report on hedge funds and private equity. The report was prepared by MEP Poul Nyrup Rasmussen and is said to be under attack by private equity and hedge funds lobbying groups.

Among others, the report calls for new regulations:

to establish EU-wide registration and authorisation of hedge fund and private equity managers;
to work on appropriate leverage levels for private equity and hedge funds, including by eliminating tax-distortive regulations;
to extend to private equity existing EU regulation on information, consultation and continuing of employment conditions of workers;
to prevent conflicts of interest in private equity takeovers by enforcing disclosure of fees and other incentives received by the target company’s directors.


tory boys never grow up said...

I haven't read the report - but I have grave doubts that direct regulation of PE/hedge funds will be the answer - they will just move outside the EU reglatory net. Rather than trying to wrestle jelly perhaps a better approach would be to try and get at those providing funding who are less mobile and are in a postion to call the tune. Higher banking capital ratios for EU banks lending to offshore entities not subject to decent corporate governance standards (and are probably more risky anyway, given the manner in which they leverage their operations)would seem to a lot more likley to achieve the desired result.

The FSA made exactly the same mistake in mortgage regulation by going for the brokers rather than those providing the finance - net result there is still dodgy mortgage selling.

Tom P said...

To be honest I've not read the report either, just skimmed it. I'll try and post up something more detailed if I get time over the weekend.

Are you in financial services out of interest?

tory boys never grow up said...

Are you in financial services out of interest?

There or thereabouts. I certainly think there is big debate to be had about how regulation is done - far too often we seem to wish the ends without thinking about how we get there, and then we are suprised that delivery is poor.