Hedge funds to face new scrutiny


Bigwigs within the European Union are this week set to take vote on how to monitor hedge funds and further increase market supervision in an attempt to offer better protection to investors and learn from the mistakes of the recent financial crisis.

The economic affair committee of the EU will examine and vote on a draft law that will enforce direct EU supervision onto managers of private equity groups, hedge funds and all other alternative investment schemes.

The new supervision measures will put restrictions on payouts such as those given in the form of “golden handshakes” and also on private equity investors who try to gain dividends from companies they have owned for less than four years. Further rules include the introductions of banking and insurance watchdogs who would lessen market betting on pan-EU markets.

If passed the measures will come into place from 2012, however all individual EU countries must first agree to them. Antolin Sanchez Presedo, one of the lawmakers involved in moving the procedures forward, said: “New European supervisory authorities are going to be born. We are going further in strengthening the new authorities. The crisis in Europe shows that we are right to do so.”

However it is thought that opposition for the measures could come from Britain, as previously Alistair Darling, the British Chancellor, stated that such new laws can only be brought in if it can be proved that public money would not have to be spent.