Confederation of British Industry Urges EU to Reject Private-Equity Law

Date: Monday, May 10, 2010
Author: Bloomberg

The Confederation of British Industry urged European Union lawmakers to vote against tighter regulation of private-equity firms.

Members of the European Parliament’s Economic and Monetary Affairs Committee are scheduled to vote today on tougher rules for hedge-fund and private-equity managers that could restrict their firms’ use of debt and limit bonuses. The parliament will then negotiate with finance ministers from the various countries on the law’s final wording.

“The proposed legislation would damage companies owned by private equity firms and discourage investment,” John Cridland, CBI deputy director-general, said in an e-mailed statement. “The additional bureaucracy and forced disclosure of commercially-sensitive information would be a real problem.”

Hedge funds and private-equity firms are under scrutiny from lawmakers worldwide who say they are partly to blame for the worst financial crisis in a generation. The Group of 20 Nations last year agreed to tighter fund oversight.

The U.K. has also sought to modify the rules, proposed by the European Commission last year, which a report commissioned by the Financial Services Authority said would cost the industry at least 4.6 billion pounds ($6.8 billion) to implement.

U.S. Treasury Secretary Timothy F. Geithner sent a letter to EU Financial Services Commissioner Michel Barnier in March raising concerns the draft law would discriminate against U.S. funds.