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Alternative Market Briefing

EU Directive may find US hedge funds falling under regulatory umbrella of European Union

Wednesday, June 03, 2009

From Kirsten Bischoff, Opalesque New York:

The draft of the European Union directive to regulate alternative managers has been a much discussed topic over the past few weeks and one Opalesque looked at in depth in this previous article: Source) The focus of the directive, which is written to protect European Union based investors into alternative investments could potentially ensnare US fund managers as well.

"A manager [with over EUR 100m in aum] with investments from any investor based in the EU will fall under this regime," says Neil Morris, of global hedge fund consultancy Kinetic Partners. "The EU is saying - we don't care where your fund is domiciled - but if you manage any money from anyone based in the EU you will be subject to these regulations."

UK-based hedge funds may wish that more than 51 firms had signed the Hedge Fund Standards Board Best Practice Standards in 2008, when this was considered the most sweeping attempt at regulating the industry.

Kinetic Partners, which has been outspoken in the press about its view of the draconian proposal for regulation in the EU, estimates it could cost UK hedge funds up to $3bln if the legislation remains in its current form.

With a 2011 target date for being enacted, the regulation includes such things as the potenti......................

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