Wed, Feb 21, 2007 - Page 5 News List

EU official praises hedge funds and private equity


Hedge funds and private equity are "good for the market," and governments should resist imposing new reporting requirements on them, EU Internal Markets Commissioner Charlie McCreevy said in an interview published in the Financial Times yesterday.

"Hedge funds and private equity are good for the market," McCreevy told the business daily, speaking from Brussels.

"They have given greater liquidity, they have added shareholder value and they have helped the rationalization and innovation of companies," he said.

Sarkozy's pledge

McCreevy said he resisted proposals such as those made by French presidential candidate Nicolas Sarkozy, who said last Wednesday that if elected he would seek a European tax on "speculative movements" by entities such as hedge funds.

"Some hedge funds do millions of transactions every month. So I don't know what they will be reporting, to whom and what the people who get these millions of reports would be doing with them," McCreevy was quoted as saying by the FT.

"Some people -- when they talk about this -- what they really want to do is regulate them out of existence. Why? Because in my view they don't want shareholder activism," McCreevy said.

He did, however, support moves by the G7 group of industrialized countries to push for greater scrutiny of the sector.

"As yet, there has not been a threat to financial stability. But if there is, it is the job of the regulators to make sure that no element of the banking industry is over-exposed" to hedge funds, McCreevy said.

"Don't be telling me about it. That is their job -- and they should be doing it in any event ... Suppose we could decide what we are regulating. What would we achieve with all that? Unless we got a global agreement, all they would do is move off and leave Europe," he said.

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