Flaws of Fund Manager Regulation – the 5 points you should know… Radio Clip

“The text is not perfect but texts are never perfect.” (MEP Jean-Paul Gauzès at a press conference in Brussels, October 2010)

Follow the link below to hear a 1.5 minute radio clip of my views on the The Alternative Investment Fund Managers (AIFM) Directive – Regulatory Standards for the industry. As you can hear from the intro, it was broadcasted on “The N@ked Short Club” on Resonance FM (2m+ listeners and growing!). Follow-on comment by Sophie van Straelen, Managing Partner of Asterias – check out her blog SVS. My main concerns are highlighted below.

1. FALSE IMPRESSION OF OVERSIGHT

2. COSTLY – Increased compliance costs (+32%) – passed on to investors – higher fees lower returns – reduce European competitiveness and leave. Already hearing about delayed launches. Could boost rather than end offshore – may lead to costly changes of legal structures and domicile.

3. REDUCED INVESTOR CHOICE – restrictions on those based outside the EU

4. MAY TRIGGER PROTECTIONISM, such as the US. Contradiction to conclusion from the April G20 summit, instructed world leaders to “promote global trade and investment and reject protectionism.”

5. INDISCRIMINATE – including small AUM funds and others of no relevance to stability of financial system or ‘systematically important’ funds – contradicting EU principal of ‘proportionality’); multinationals exempt – making others uncompetitive – costs do not match benefits for certain funds

BOTTOM LINEA SIGN OF A MORE INTRUSIVE REGULATORY REGIME – start forming a plan of action ahead of 2103 implementation (not carried out by enough yet)

Worth Remembering:

The Swedish Central Bank (The Riksbank) says of short selling:

“The benefits of short selling clearly outweigh the drawbacks. Short selling allows investors with a negative view on the value of a company to take a position that reflects that view. By doing so their information will be incorporated in the prices and thus, the price formation will be more efficient.” (June 09)

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