Wednesday, March 18, 2009

EU to Propose Directive on Private Investment Vehicles

As reported by Reuters, the European Commission will propose a directive aimed at hedge funds and private equity firms in order to enhance EU-wide regulatory oversight of the industry. The proposed directive should be published on April 21, 2009, and is also expected to address remuneration policies in the financial sector. An EU directive is a legislative act intended to align national legislation, as it is binding on member states as to the result to be achieved but leaves them the choice of the form and method they adopt to implement the directive's objective within the framework of their internal legal order.



FSA Publishes Turner Review

The United Kingdom Financial Services Authority (the "FSA") published a review by Lord Turner, its Chairman, that examines the causes of the financial crisis and provides recommendations to the international community for enhancing regulatory standards, supervisory approaches and international cooperation and coordination. The key recommendations that are relevant for the hedge fund industry include (i) a regulatory and supervisory coverage that follows the principle of economic substance, not legal form; (ii) the power for authorities to gather information on all significant unregulated financial institutions (including hedge funds) to allow assessment of overall system-wide risks; (iii) the ability for regulators to extend capital and liquidity requirements or impose other restrictions on any institution that develops bank-like features that threaten financial stability and/or otherwise become systemically significant; and (iv) global coverage by agreements on regulatory standards for offshore financial centers.

Discussion Paper