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Derek Delaney Benedicte Gravrand, Opalesque Geneva:

In July of this year, it will be illegal for fund managers to market in Europe unless they are compliant with the AIFMD. What makes this regulation so weighty is that 25% of U.S. capital comes from Europe and most U.S. managers are unaware that their prospective investors may become illegal this summer.

The European Union's Alternative Investment Fund Managers Directive (AIFMD) requires more reporting and compliance than the U.S. Securities and Exchange Commission (SEC). U.S. investment managers operating in the EU should acclimatise.

According to Ernst & Young, they can do so in three ways:

• Establish a EU manager and fund. This gives managers access to the entire EU for marketing, although they have to deal with compensation rules and more compliance; • Rely on the somewhat uncertain national private placement regimes (NPPRs), in which they trade compliance burdens for reporting burdens, as they have to repot to multiple regulators; • Implement reverse solicitation, thus deal with minimal compliance and cease marketing in the EU (and make sure to be able to prove it).

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