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From Kirsten Bischoff, Opalesque New York:

Concern continues to mount over the protectionist direction of proposed hedge fund regulation. The split between the proposed “passport” that the European Commission suggests be used to grant permission to non-European managers for marketing within the region and the European Council which is pushing for individual nations to reserve the right to allow foreign funds to market to their residents is quite wide.

Firms such as auditing, tax and regulatory advisor Kinetic Partners (which has offices in both the US and the UK, as well as Dublin, Cayman and Geneva) says the regulation could result in asset losses for both US and European managers.

“We believe the European council’s proposal to maintain a form of private placement for non-EU funds is the only way to avoid a retreat from Europe by US investors and AIFs (Alternative Investment Funds), as well as avoiding retaliatory action by the US authorities,” said Andrew Shrimpton, Member, Regulatory Compliance at auditing, tax and regulatory advisor Kinetic Partners in an email.

The “passport” suggestion remains too stringent for many, with US regulators stating that the stringent requirements of the EU Regulation would mean US funds would no longer be able to market to European investors (which contribute approximately 20% to the US industry’s assets).

However, Kinetic estima......................

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