Hedge fund body conscripts members in battle against EU directive
The trade body for hedge funds has asked its members to identify European parliamentarians and policy makers that they can apply pressure on, in its most concerted attempt yet to limit damage from European Union plans to regulate its industry.
The Alternative Investment Management Association has criticised an EU draft directive from April to regulate hedge fund and private equity fund managers as burdensome, inflexible, politically influenced, and drafted without consultation.
Under the draft, EU-based managers running more than €100m ($139m) must register with regulators, disclose various information to watchdogs and investors, and set aside capital for business stability. Those who don't are banned from marketing funds in the EU.
Escalating its battle against the directive, Aima yesterday asked members to tell it of any lobbying meetings they attended or held on the directive, and which politicians and bureacrats connected to EU policy they knew.
The body said: "We would like to know what connections to 'points of influence' our members have directly in the European Parliament, Commission or policy makers in member states, and indirectly in the governments of non-EU states likely to be affected. We would also like to know what interviews or articles our members are contributing to on the directive."
It is understood Aima is seeking to co-ordinate industry action against the directive, although it is at an early stage, gathering names rather than targeting individuals for pressure.
One manager said: "Any trade body would lobby for its members, and Aima is no exception. Aima would need to know who's doing what, if it doesn't want to double up on efforts, or if it wanted to co-ordinate them."
He added: "There are a lot of groups trying to get the directive changes, it'll be a question of the strength of will in Paris, Berlin and Brussels not to change."
Separately, Aima is understood to have lobbied the UK Government in a bid to encourage Brussels to modify parts of the directive with which Aima disagrees. If it fails, smaller managers could struggle to meet costs to comply, although larger, better-resourced funds are expected to be largely unaffected.
The EU draft directive has been widely panned in recent weeks. Simon Thomas, partner at lawyers Akin Gump, said: "As a consequence of [it], a London manager running an identical strategy such as a Ucits fund, a managed account and a Cayman Islands hedge fund will be subject to three different regulatory regimes. That's not a good thing."
Thomas added that the directive's aim of bolstering investor protection duplicated existing disclosure rules in domiciles where funds are based.
John Langan, partner at lawyers Withers, said: "The draft directive...effectively sweeps in a much wider range of funds that are not Ucits funds, including property funds and investment trusts that are a world away from traditional hedge and private equity funds."
-- Write to David Walker at dwalker@efinancialnews.com
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