On September 23, the European Parliament adopted a report demanding regulation of private equity funds and hedge funds. The Parliament formally requested that the European Commission propose legislation before December 2008.
Parliament’s detailed recommendations of matters to be covered by the Commission regulations included:
- Capital requirements,
- Greater disclosure of investment policy and risks,
- Increased transparency requirements with respect to prime brokers,
- A harmonized EU framework for venture capital and private equity,
- Prevention of asset stripping by private equity vehicles, and
- Enhanced requirements for management of conflicts of interest.
Generally, the Commission was instructed to examine all existing EU financial market legislation and identify any lacunae regarding the regulation of hedge funds and private equity and to submit proposals for plugging such gaps.
The Commission was also instructed to submit a proposal for the establishment of a European Union private placement regime allowing for cross-border distribution of investment products, including alternative investment vehicles, to eligible groups of sophisticated investors.